Indian Hotels - Result Update - ICICI Securities

Indian Hotels (IHCL) reported 14.6% drop in revenue to Rs. 1,063 crore (I-direct estimate: Rs. 995 crore) led by 48% drop in income for March 2020. Revenues were flattish at Rs. 4,463 crore in FY20, in contrast to 4% growth on 9MFY20 basis. Consolidated EBITDA margins for Q4FY20 fell 330 bps YoY to 19.6% (I-direct estimate: 20.5%); standalone (pure domestic) business saw a sharper decline of 522 bps. EBITDA for the quarter dropped 27% YoY to Rs. 207.9 crore (I-direct estimate: Rs. 203.7 crore). For FY20, EBITDA increased 16.6% YoY, with higher share of growth coming from international business. On a full year basis, consolidated EBITDA margins improved 330 bps, driven by international business seeing a healthy recovery, with margins improving from 5.8% in FY19 to 12% in FY20. PBT for Q4FY20, saw a 52% decline led by lower EBITDA and higher interest and depreciation charges (lease expense reclassification). However, decline on the PBT, PAT front was restricted by exceptional gains from sale of non-core assets.

Valuation & Outlook

The sector outlook remains grim as recovery would be slow and back ended. FY21 would most probably be a washout year for the sector. This prolonged recovery could pose a significant challenge for IHCL. However, given its strong parentage and brand visibility, these concerns get softened. However, we remain cautious and downgrade the company to REDUCE with a target price of Rs. 80/share (i.e. 18xFY22E EV/EBITDA).

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_IndianHotels_Q4FY20.pdf

Shares of INDIAN HOTELS CO.LTD. was last trading in BSE at Rs.88.65 as compared to the previous close of Rs. 91. The total number of shares traded during the day was 134269 in over 1434 trades.

The stock hit an intraday high of Rs. 89.3 and intraday low of 86. The net turnover during the day was Rs. 11800243.

Source : Equity Bulls

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