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Research
Buy Taj GVK Hotels Resorts Ltd. - 4QFY2012 Result Update - Angel Broking
Posted On : 2012-05-04 10:41:00( TIMEZONE : IST )
For 4QFY2012, TajGVK reported 2.3% yoy and 7.0% qoq growth in its top line to Rs.71cr. The company's OPM came in at 28.6% in 4QFY2012, as against 39.2% in 4QFY2011, down 1,057bp yoy. Occupancy rates (OR), especially for Hyderabad, remained weak during the quarter. Only Taj Krishna witnessed an increase in its ARR to Rs.9,100 in 4QFY2012 from Rs.8,400 in 4QFY2011. We are positive on the company's outlook, given the key markets of the company, Hyderabad and Chennai, are showing signs of stabilizing. We maintain our Buy recommendation on the stock.
OR declines in Hyderabad properties on a yoy basis: OR and ARR fluctuated across Hyderabad properties due to the ongoing issues over Telangana. Taj Krishna reported a 700bp yoy decline in OR to 57%; but, at the same time, its ARR improved by 8.3% yoy to Rs.9,100 in 4QFY2012 from Rs.8,400 in 4QFY2011. Taj Deccan and Banjara also witnessed a decline in OR to 67% and 77%, respectively, from 74% and 79% in 4QFY2011. ARR of these properties also declined on a yoy basis to Rs.5,400 and Rs.5,300, respectively. Taj Chandigarh's OR declined to 69% in 4QFY2012 from 74% in 4QFY2011; and its ARR declined to Rs.6,500 in 4QFY2012 from Rs.7,600 in 4QFY2011. Taj Chennai also witnessed a decline in OR to 72% in 4QFY2012 from 75% in 4QFY2011; and its ARR declined to Rs.5,300 in 4QFY2012 from Rs.5,500 in 4QFY2011. The company commenced operations at its new Begumpet property and witnessed OR of 44% and ARR of Rs.5,400 during the quarter.
Outlook and valuation: We maintain our positive outlook on the entire hotel industry, as increasing foreign tourist arrivals and economic growth would lead to a further increase in demand for hotel rooms. TajGVK is expected to benefit from the addition of its 189-room property in Begumpet, which has taken its owned rooms to 1,086 from 897. The stock is currently trading at attractive valuations of 6.6x its FY2014E EPS. We have valued the stock at 12x its FY2014E earnings. We maintain our Buy view on the stock with a revised target price of Rs.108.
