Padmakshi Financial positive on Indian Hotels; target Rs 93

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Padmakshi Financial positive on Indian Hotels; target Rs 93

Padmakshi Financial Services is positive on Indian Hotels (IHCL). The research firm has remained positive on the company and maintained price target of Rs 93, in its January 31, 2012 research report.

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Padmakshi Financial Services is positive on Indian Hotels (IHCL). The research firm has remained positive on the company and maintained price target of Rs 93, in its January 31, 2012 research report.

"Indian Hotels (IHCL) reported Income from operations at Rs. 521.48 Crs. for the quarter ended December 31, 2011 a meager increase of 7% over same quarter in the previous year, due to the global economic scenarios as well as no price hikes taken by the company during its season period. EBITDA levels declined from Rs. 144.28 Crs in the same quarter previous fiscal to Rs. 140.59 this quarter with margins dipping by 277 bps. Net Profits at Rs. 50.48 Crs. remain flat over previous year's profit of Rs. 50.29 Crs."

"IHCL increased its room count by 10% on yoy basis for Q3FY12 to ~3,400 with hotels launched in Yeshwantpur, Gateway Hotel in Gujarat, The company also has a pipeline of adding 12 hotels and 1373 rooms in the year 2012 under management contracts as well as Joint Ventures. In 2013 it further is inking plans to add another 9 hotels and 1411 rooms. Currently the only Greenfield projects that the company is employed on are the hotels in Dwarka with a capex of close to Rs. 300 Crs., out of which 150 is already provided for and another in Guwahati with a capital outlay of close to Rs. 110 Crs. However this substantial addition in room count has not been able to convert into higher ARR's despite a growth in foreign tourist arrivals (FTA) of 9.2% yoy. The ARR's for almost all the IHCL hotels remained flat despite the peak season. We believe this pain would likely to be there in the current quarter and will only hive off past Q4FY12 to 1HFY13 due to the Euro zone and US turmoil."

"We remain positive on the overall industry outlook for the coming financial year and IHCL having a brand higher as compared to others in the same sector remains one of our top picks. We believe with the price hikes that the company intends to make in the coming quarters and with a strong pipeline of hotels under the Ginger and the Gateway brand, IHCL is well poised to cater to the growing demand. At CMP of Rs. 65 it is trading at a PE of 25x with a FY13 EPS of Rs 2.59 and a P/BV of 1.66x FY13E book value of Rs. 38.59. Hence we continue to maintain our price target of Rs 93," says Padmakshi Financial Services research report.

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