Maintain 'buy' on Indian Hotels - TP Rs.80 - Geojit BNP Paribas Financial Services

- Industry experts have indicated that Indian Hotel's US hospitality portfolio is unlikely to break- even in the near term. Pierre Hotel has location advantage but lacks brand value, which is unlikely to improve in the near term.

- Domestic hospitality business of the company also is likely to be muted in the next two quarters due to slowing economy and increasing room supply.

- An increase in management fees over the next two years would partially offset any margin compression due to stagnant RevPars.

- Despite the many headwinds, buy rating on the stock is maintained as the stock is traded below its liquidation value and it has a favorable risk- reward ratio at the current price.

- The balance sheet of the company is expected to be stable and the stock trades at a five year EV/EBITDA low.

- The TP has been reduced to Rs.80 from Rs.93 because of the tough business conditions today.

Source : Equity Bulls

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