ICICI Direct is bullish on TajGVK Hotels and Resorts has recommended buy rating on the stock with a target price of Rs 220 in its research report dated July 29, 2019.
ICICI Direct's research report on TajGVK Hotels and Resorts
TajGVK reported healthy margin expansion of 787 bps YoY (25.6%) during the quarter despite flattish revenue growth. Revenue growth remained flat mainly due to seasonal slowdown aided by high base of last year that saw revenue growth of over 22%. Revenues came in at Rs 72.4 crore, flat YoY (below I-direct estimate Rs 78.7 crore). EBITDA, however, increased 43.5% to Rs 18.6 crore (above I-direct estimate: Rs 13.8 crore) with margins expanding 787 bps YoY to 25.6% owing to significantly lower repairs & renovation expenses (Rs 0.87 crore in Q1FY20 vs. Rs 6.78 crore in Q1FY19) leading to a 22% reduction in other expenses to Rs 22.5 crore. Net profit surged 50.5% YoY to Rs 5.9 crore supported by higher operating profit and JV reporting profit of Rs 0.3 crore against a loss of Rs 0.6 crore in the previous year.
We maintain our BUY rating on TajGVK considering the above. Hence, we value the company at 16x FY21E EV/EBITDA and arrive at a target price of Rs 220.
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