Expect 25-30% returns in Asian Hotels (North): Tulsian

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Expect 25-30% returns in Asian Hotels (North): Tulsian

One can expect 25-30% returns in Asian Hotels (North) on an annualized basis over the next two years, says SP Tulsian of sptulsian.com.

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Excerpts from Bazaar on CNBC-TV18 Watch the full show » ALSO READ See previous views by SP Tulsian See what other Experts & Brokerages are saying about Asian Hotels See messages about Asian Hotels Asian Hotels BSE | NSE 30/05/12 Are Mutual Funds betting on Asian Hotels?

One can expect 25-30% returns in Asian Hotels (North) on an annualized basis over the next two years, says SP Tulsian of sptulsian.com.

Tulsian told CNBC-TV18, "Asian Hotels (North) has presence in Mumbai and Delhi. Actually in the first place when the split had happened of the parent company into three parts they got The Hyatt Regency in Delhi which has rooms 512 and then on 18 October 2010, they have merged their subsidiary company which owns Four Seasons Hotel in Mumbai with room capacity of 202. And because of this merger of subsidiaries the paid up capital of the company increased to about Rs 19.5 crore and at that stage promoters have also increased their stake in the company to 75% by converting the preferential held by them."

He further added, "Going by the present market cap of the company it is close to about Rs 450 crore and even the financial performance, which we see for nine months, though in the consolidated accounts the reflection of the consolidate of the subsidiary companies also would have been reflected but I am taking here the operations for nine months on a consolidated basis, which has given a topline of close to about Rs 200 crore with an EPS of close to about Rs 10 on the expanded equity."

"Going forward because they are increasing the hotel room capacity by about 500 rooms in Delhi in next couple of years but if you take the present valuation of marketcap of less than Rs 450 crore with presence of the company in Mumbai and Delhi both, I think both are the prime slot and considering the value of the property. I don't think even the balance sheet of the company is quite leveraged."

"Maybe in the hotel stock with such a low equity of less than Rs 20 crore and promoters stake of 75% presence n Delhi and Mumbai with present room capacity of close to 750 rooms likely to get expanded to 1250 rooms in the next couple of years makes the stock quite reasonable at a valuation of Rs 222. Those who are having long-term view because generally in the case of the hospitality or maybe the hotel stocks one needs to have a view of at least 1-2 years. So taking that into consideration, this company can give a return of about 25-30% on an annualized basis over the next two years."