Hold Taj GVK Hotels, NHPC: ICICIdirect.com

Brokerage house ICICIdirect.com has recommended a hold rating on Taj GVK Hotels & Resorts, NHPC with a target price of Rs 63, Rs 19 per share respectively in its February 2014 research reports.

February 10, 2014 / 13:40 IST

26 Aug, 2025 12:21

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ICICIdirect.com's research report

Taj GVK Hotels & Resorts

"A consistent fall in room tariffs even in the peak season along with muted average occupancy levels across Hyderabad, Chennai and Chandigarh led to a plunge in revenue per room (RevPAR). As a result, TajGVK Hotels recorded a muted topline (marginally below our estimates) in Q3FY14 at Rs 65.3 crore (down 2.0 percent YoY). The slowdown in the economy along with political tension in Andhra Pradesh over Telangana impacted demand and, hence, the topline. In addition, margins have also been impacted due to de-growth in topline despite an attempt to contain operating costs. Operating cost were down 2 percent YoY to Rs 49.3 crore. Power & fuel cost declined sharply by 17 percent YoY while raw material was up 7.8 percent due to opening of a new hotel at Begumpet (Hyderabad) last year. However, due to lower interest cost and cost control measures, the company reported the first profitable quarter in FY14 after reporting losses in the previous two quarters. 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 holds the key for growth over the longer term. We further lower our revenue growth forecast for FY13-15E from 1.7 percent to 1.4 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 re-rating over the longer term. Hence, we maintain our HOLD rating and revise our target price to Rs 63 (i.e. at 8.5x FY15E EV/EBITDA)."

NHPC

"NHPC reported Q3FY14 earnings in line with expectations as topline growth was offset by increased fixed expenses from incremental capacity addition. Availability declined across newly commissioned plants while Dhauliganga is expected to resume operations from Q1FY15. While revenues increased 13.3 percent YoY, PAT was down ~17 percent YoY to Rs 259.4 crore. Capacity addition in 9MFY14 stood at 357 MW while the company plans to add another ~ 710 MW capacity over the next 15 months. We ascribe valuations to operating & non operating elements of net worth as a good amount of CWIP rests in projects like Subanshri lower and Parbati II, which pose risk of lower return on investment. Factoring in line results, lower generation growth and muted capacity addition post FY15E, we maintain our HOLD rating and value NHPC at 0.7x on FY15E BV," says ICICIdirect.com research report.