Juniper Hotels, the largest owner of Hyatt-affiliated hotels in India, is the second-largest listing this year, and among the largest by a domestic hotel developer. The shares surged after a muted debut on Feb 29, with the management sounding confident of funding growth via internal accruals and current fund raise. The company intends to use the proceeds to repay loans and those of CHPL and CHHPL, entities it acquired in September 2023. Although Mumbai-based Juniper Hotels is loss-making and has the highest debt-to-equity ratio in the segment, it also boasts the highest EBITDA per room. Let's delve into the fundamentals of the company through five charts.
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Loss-making history: Juniper Hotels, a luxury hotel developer, has reported losses over the past three financial years and in the first six months of FY24. The losses have been attributed to the burden of borrowings and associated interest payments that have weighed down on the company's earnings. However, once the loans are repaid, significant interest savings are expected to positively impact the company's bottom line.
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Debt burden: Juniper Hotels has the highest net borrowings-to-equity ratio among its listed peers. Even debt-free companies such as Indian Hotels and EIH, along with Chalet Hotels, which operates on an asset-heavy model, have relatively a lower debt-to-equity ratio. To address this, the company is raising Rs 1,800 crore of fresh equity, with Rs 1,500 crore earmarked for debt reduction. The company's debt currently stands at about Rs 2,210 crore, including Rs 300 crore in promoter loans from overseas ownership companies. The company aims to achieve a leveraging level of less than 1 time by FY25.
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Revenue split: Juniper's room revenue is projected to align with industry standards. Currently, the company derives 45 percent of its revenue from rooms, with F&B close behind. Juniper, alongside Chalet, records similar revenue contributions from the F&B segment. However, Indian Hotels and EIH have the highest share from this segment, standing at 37 percent as of FY23.
Occupancy rates to pick up: The company boasts an occupancy rate of 76 percent, surpassing that of peers including Chalet Hotels, EIH, and Indian Hotels. However, the management anticipates the rate to stabilise at 80-82 percent.
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EBITDA/Room: Despite the highest level of borrowings, Juniper achieves higher operational income per room than industry standards. This is attributed to a diversified revenue stream and active asset management, which have contributed to increased efficiencies, as highlighted by the management in an exclusive conversation with Moneycontrol.
Nickey Mirchandani NICKEY MIRCHANDANI Assistant Editor at Moneycontrol. She’s a presenter and a stock market enthusiast with over 12 years of experience who loves reading between the lines and scanning through numbers.
