EIH Ltd - Q2FY21 Result Update - ICICI Direct

EIH's Q2FY21 operational performance was below our estimates as premium segment hotel remained worst affected due to international travel ban along with weak business segment demand due to pandemic. Revenues for the quarter fell ~79% YoY to Rs. 60.4 crore (vs. I-direct estimate of Rs. 69.9 crore). The company managed to curtail operating expenditure by over 42% YoY to Rs. 155.6 crore. The major reduction was in other expenses that were down 46% YoY to Rs. 69 crore. This helped restrict EBITDA losses to Rs. 95.2 crore vs. EBITDA loss of Rs. 125 crore in Q1FY21. Net loss came in at Rs. 115.2 crore for the quarter vs. net loss of Rs. 118.2 crore in Q1FY21. Despite challenges, EIH managed to reduce cost of debt by 104 bps YoY to 7.8% due to strong brand equity and healthy b/s. Post fund raising of Rs. 349.7 crore through rights issue in October 2020, net debt further reduced from Rs. 577 crore to Rs. 261 crore, representing D/E of 0.1x as of October 2020.

Valuation & Outlook

The company has initiated various steps to revitalise itself during these challenging times. This would not only help it to endure itself but also to flourish when business returns to normalcy. With strong b/s and strategic property locations across key destinations, the company is best positioned to ride on domestic tourism growth story. At the CMP of Rs. 74, the stock is trading at adjusted EV/room of Rs. 1.8/room i.e. at 50% of its fair value). Hence, we maintain our BUY rating with unchanged target price of Rs. 105/share (i.e. @ 24x FY22E EV/EBITDA).

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_EIH_Q2FY21.pdf

Shares of EIH LTD. was last trading in BSE at Rs.74.2 as compared to the previous close of Rs. 74.15. The total number of shares traded during the day was 49426 in over 730 trades.

The stock hit an intraday high of Rs. 75 and intraday low of 73.65. The net turnover during the day was Rs. 3664897.

Source : Equity Bulls

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