Indian Hotels sees some initial signs of a pick-up in revenue per available room (RevPAR) growth trends and expects the second half of FY20 to be better than the first half.
"Cost efficiencies helped improve margin in the first half in a weak growth environment. In our base case we apply a target FY21 EV/EBITDA multiple of 19.0x," says the global brokerage house which has a target price of Rs 197, implying 32.88 percent potential upside from current levels.
The company reported consolidated profit at Rs 80.11 crore in Q2FY20 against loss of Rs 38.04 crore in the same period in 2018 due to lower tax cost and revenue grew by 4.4 percent YoY, backed by an uptick in occupancy.
RevPAR (revenue per available room) registered a growth of 3.9 percent during the quarter, driven mainly by a 4 percent expansion in occupancy. The occupancy for the period under review came in at 68.2 percent. However, the ARR (average room rate) was down 4.5 percent YoY.
A healthy growth in RevPAR stood out, driven by higher occupancy. Its international business was impacted by one-off write-offs even as the domestic operations showed shoots of revival.
In the case of Chalet Hotels, Morgan Stanley expects the stock to rally by 13 percent to Rs 408, citing good growth going ahead.
The company expects better average daily rate (ADR) growth given high occupancies in key markets.
"Full cash flows may commence from Sahar Retail and Sahar Commercial projects. Bengaluru commercial project commissioning may be done early next year," Morgan Stanley says, adding that the company is on track to complete the Westin Hotel Project in Q2FY21 ahead of earlier guidance.
The company posted a consolidated profit at Rs 10.27 crore in the quarter ended in September, against the loss of Rs 12.45 crore in the same period in 2018, and the revenue grew by 0.35 percent year-on-year (YoY) to Rs 235.37 crore in Q2FY20.
MSCI Inc also added Chalet Hotels stock in its MSCI India Domestic Small-cap index on May 29.Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.