Research done by - HDFC Sec
Q4FY07 & FY
07 Results Review; Marginally below expectation:
IHCL reported a turnover of Rs 15,445 million for the year ended March 31, 2007, and a PAT of Rs 3223.9 million, which were 40% and 75% higher yoy. The healthy topline growth was led by 28% rise in ARRs (Rs 9,234) and 3% rise in occupancy (73%).
For the quarter ended March 07, the turnover of Rs 5051.6 million and PAT of Rs 1345.2 million were higher by 45% and 71% yoy, respectively. The top line growth was aided by 25% rise in ARRs and 4% rise in occupancy.
OPM for the quarter improved 638 bps to 42%, while for the full year, it jumped a whooping 745 bps to 36.5%. Other income during the quarter and the year ended March 31, 2007, included the benefits of higher dividends received, profit booked on sale of shares and foreign currency gain.
The consolidated top line rose by 36.7% to Rs. 25115 million, against our estimate of Rs. 24300 million, a gap of 3.2%. The bottom line stood at Rs 3699 million, a growth of 48.7% against our estimate of Rs 3849 million.
Outlook and Valuation
Envisaging a tight demand-supply mismatch in the luxury category (incremental demand of over 55,000 rooms in the next 5 years, against the planned expansion of 18,000 rooms), we believe, ARRs would continue to be on the uphill, at least for a year or two. Also, within IHCL, over 1000 rooms would be added in the next 2 years. With standalone IHCL expected to do better (assuming a proxy to the industry), a turnaround in the performance of subsidiaries and higher share of profits through JVs and associates, would remain key to future earnings growth. IHC’s extensive geographic reach, strategy of spreading itself into all segments, from star deluxe to budget hotels and increasing tie-ups for management contracts would not only give it a competitive advantage, but de-risk its revenue stream too.
We value the target price at Rs 195, offering 36% upside from current levels. The stock is available at a PER of 16.0x FY08E & 11.1x FY09E EPS of Rs 9 and Rs13. We re-iterate “Outperformer”.
Q4FY07 & FY
07 Results Review; Marginally below expectation:IHCL reported a turnover of Rs 15,445 million for the year ended March 31, 2007, and a PAT of Rs 3223.9 million, which were 40% and 75% higher yoy. The healthy topline growth was led by 28% rise in ARRs (Rs 9,234) and 3% rise in occupancy (73%).
For the quarter ended March 07, the turnover of Rs 5051.6 million and PAT of Rs 1345.2 million were higher by 45% and 71% yoy, respectively. The top line growth was aided by 25% rise in ARRs and 4% rise in occupancy.
OPM for the quarter improved 638 bps to 42%, while for the full year, it jumped a whooping 745 bps to 36.5%. Other income during the quarter and the year ended March 31, 2007, included the benefits of higher dividends received, profit booked on sale of shares and foreign currency gain.
The consolidated top line rose by 36.7% to Rs. 25115 million, against our estimate of Rs. 24300 million, a gap of 3.2%. The bottom line stood at Rs 3699 million, a growth of 48.7% against our estimate of Rs 3849 million.
Outlook and Valuation
Envisaging a tight demand-supply mismatch in the luxury category (incremental demand of over 55,000 rooms in the next 5 years, against the planned expansion of 18,000 rooms), we believe, ARRs would continue to be on the uphill, at least for a year or two. Also, within IHCL, over 1000 rooms would be added in the next 2 years. With standalone IHCL expected to do better (assuming a proxy to the industry), a turnaround in the performance of subsidiaries and higher share of profits through JVs and associates, would remain key to future earnings growth. IHC’s extensive geographic reach, strategy of spreading itself into all segments, from star deluxe to budget hotels and increasing tie-ups for management contracts would not only give it a competitive advantage, but de-risk its revenue stream too.
We value the target price at Rs 195, offering 36% upside from current levels. The stock is available at a PER of 16.0x FY08E & 11.1x FY09E EPS of Rs 9 and Rs13. We re-iterate “Outperformer”.
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