Hold Taj GVK Hotels; target Rs 62: ICICIdirect.com
Brokerage house ICICIdirect.com has recommended hold rating on Taj GVK Hotels & Resorts with a price target of Rs 62, in its August 05, 2013 research report.
August 06, 2013 / 18:47 IST
ICICIdirect.com's report on Taj GVK Hotels & Resorts
"Taj GVK Hotels & Resorts recorded muted topline growth (below our estimates) in Q1FY14 at Rs 57.8 crore (down 7.5 percent YoY). The slowdown in the economy along with the global economic crisis have impacted demand and, hence, the topline. In addition, its profitability was also impacted by higher interest burden and depreciation charges of its Begumpet property. Operating cost was up 3 percent YoY but 4 percent lower QoQ. Raw material costs increased 1.8 percent YoY, other expenses were down 1.04 percent YoY while employee & power cost increased 6 percent and 8 percent YoY, respectively, due to opening of a new hotel at Begumpet (Hyderabad) last year. Margins also declined 818 bps due to poor sales. Going ahead, we expect margins and profitability of the company to remain under pressure due to lower demand and excess supply in the Hyderabad region. However, its strategic location of hotels and competitive pricing policy hold the key for growth over the longer term.""We lower our revenue growth forecast for FY13-15E from 6.8 percent to 3.7 percent, considering the supply overhang across the Hyderabad region that squeezed ARR growth. However, its strategic location of hotels and competitive pricing policy hold the key for growth over the longer term. Hence, we maintain our HOLD rating and revise our target price to Rs 62 (i.e. at 7.5x FY15E EV/EBITDA)," says ICICIdirect.com research report.Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. 
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