· TajGVK reported a top-line growth of 10.0% yoy with sales of Rs70cr (Rs63cr), which was below our estimates of Rs75cr. Net profits increased by 5.8% yoy to Rs12.9cr (Rs12.2cr).
· OPM declined by 181 bps to 39.7% (41.5%), mainly because of higher employee expenses. The OPM for 4QFY2011 was in-line with our estimates of 40.0%.
· PAT margins at 18.5% were also in-line with our estimates of 18.6%, but were 73 bp below 19.2% in 4QFY2010.
The Hotel industry continues to witness a steady recovery, with an improvement in the Foreign Tourist Arrivals (FTA) and the overall economy. For TajGVK, the Chennai and Chandigarh hotels have clocked impressive occupancy rates of 74% and 75% during the quarter. In FY2012, TajGVK is expected to add a 189 rooms hotel, increasing its owned rooms to 1,086 from 897 currently. Moreover, it is also looking at building a hotel in Bengaluru and hotels under the brand ‘Ginger’ across Andhra Pradesh. The stock is trading at attractive valuations, given its own historical valuation levels and the discount at which it is trading at compared to its peers. We maintain a Buy on the stock. We may revise our numbers post the management call.
| Exhibit 1: 4QFY2011 Actual vs. Estimates | |||
| (Rs cr) | Actual | Estimates | Var (%) |
| Revenue | 70 | 75 | (6.9) |
| EBITDA | 28 | 30 | (7.6) |
| OPM (%) | 39.7 | 40.0 | (33) bp |
| PAT | 13 | 14 | (7.2) |
Exhibit 2: 4QFY2011 Financial Performance
Key Financials
| Y/E March (Rs cr) | FY2010 | FY2011 | FY2012E | FY2013E |
| Net Sales | 229 | 261 | 309 | 344 |
| % chg | (3.5) | 13.7 | 18.7 | 11.3 |
| Net Profit | 36 | 43 | 60 | 70 |
| % chg | (31.8) | 19.2 | 39.0 | 17.0 |
| EBITDA Margin (%) | 37.8 | 37.5 | 40.4 | 40.6 |
| FDEPS (Rs) | 5.8 | 6.9 | 9.6 | 11.2 |
| P/E (x) | 17.6 | 14.8 | 10.6 | 9.1 |
| P/BV (x) | 2.2 | 2.0 | 1.7 | 1.5 |
| RoE (%) | 12.4 | 13.5 | 16.3 | 16.4 |
| RoACE (%) | 15.5 | 16.0 | 20.0 | 21.8 |
| EV/Sales (x) | 3.3 | 3.0 | 2.4 | 2.0 |
| EV/EBITDA (x) | 8.9 | 8.0 | 6.0 | 4.9 |
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