Indian Hotels - Q4FY21 First Cut - ICICI Direct

(CMP: Rs. 112; MCap: Rs. 13,260 crore)

IHCL's Q4FY21 performance broadly remained ahead of our estimates led by better performance from leisure segment (during January-February 2021) and prudent cost management leading to positive EBITDA for the quarter.

Q4FY21 Earnings Summary

- Consolidated revenue improved by ~10% QoQ to Rs. 615 crore (vs. I-direct estimate: Rs. 542.1 crore) while it was down 42.1% on YoY basis. Domestic occupancy improved to 72% vs 52% last quarter and 15% last year due to traction in the leisure segment. Revenue per room (RevPAR) were higher by 29.3% QoQ to Rs. 3329/room

- For the full year, destinations like Goa and Rajasthan reported occupancy of 52% and 43%, respectively, while business destinations continue to remain affected with Mumbai, Delhi and Bengaluru reporting average occupancy of 37%, 30% and 30% respectively on full year basis

- Total operating expenditure declined by 36.4% YoY to Rs. 543.7 crore. As a result, the company managed to report EBITDA of Rs. 71.3 crore (vs I-direct estimate: EBITDA loss of Rs. 31.1 crore) from EBITDA loss of Rs. 16.7 crore in Q3FY21. On standalone basis, the company reported EBITDA of Rs. 118 crore led by sharp recovery in the leisure destinations vs EBITDA of Rs. 48 crore in Q3FY21 and EBITDA loss of Rs. 87 crore during Q2FY21

- Fixed cost per month reduced from Rs. 163 crore to Rs. 118 crore during FY21 leading to average savings of Rs. 135 crore per quarter. The key levers are 1) decline in staff to room ratio from 1.53 FY20 to 1.14 through redeployments in new properties and multiskilling 2) lease rental waivers of Rs. 49 crore 3) annual savings of Rs. 135 crore through prudence in all other corporate expenditure

- Consolidated net loss came in at Rs. 91.3 crore (vs. net loss of Rs. 118.9 crore in Q3) that included exceptional gain of Rs. 25.5 crore. On a standalone basis net loss was at Rs. 50 crore

- The gross debt has increased from Rs. 2602 crore in FY20 to Rs. 3633 crore in FY21 to maintain the liquidity. The net debt is now at Rs. 3110 crore with net D/E ratio of 0.73x vs. 0.36x last year. The average cost of debt is at 6.5% (down 50 bps from March 2020). The board has further approved fund raising not exceeding Rs. 275 crore through ECB/FCB or NCD

- The company signed 17 hotels in the current fiscal, adding over 2,200 rooms to its portfolio, including strengthening its presence in the East with three new Taj hotels

The second wave of pandemic has again started impacting domestic demand which is likely to delay the further recovery till the time situation comes under control. On the other hand, the company is hopeful of demand recovery in US and UK over next 3-4 months with the situation now gradually coming under control. Overall, the company is expecting improvement in their consolidated revenues for FY22E vs FY21. The company is also focusing on driving efficiencies through cost optimization that was visible in Q4FY21 performance as well with positive EBITDA even at RevPAR of only Rs. 3329/room. With more focus on asset light business going forward, we expect liquidity profile of the company to improve going forward.

We would be coming up with a detailed report soon.

Shares of INDIAN HOTELS CO.LTD. was last trading in BSE at Rs.111.45 as compared to the previous close of Rs. 110.55. The total number of shares traded during the day was 282455 in over 2435 trades.

The stock hit an intraday high of Rs. 114.7 and intraday low of 107.55. The net turnover during the day was Rs. 31642768.

Source : Equity Bulls

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