Taj GVK Hotels & Resorts Ltd. share price target

About the stock: TAJGVK Hotels is a Hyderabad based premium hotel player with Hyderabad accounting for 67% of revenues (pre-Covid). The company owns & operates seven properties with total 1361 rooms. Of these, four properties are based in Hyderabad, which is witnessing good growth. Other three properties are located in Chennai, Chandigarh and Mumbai (near the domestic airport), respectively....

The ongoing coronavirus outbreak has had a severe impact on the hotel bookings in India from Feb-20 onwards with massive forward booking cancellations across cities. This in turn has eroded the ability of hotels across India with heavy loss of business during this peak season time. The extent of this lost business has primarily been seen across all major tourist and business destinations and we expect the situations to remain severely weak with individuals cancelling or deferring their travel plans and thousands of companies adopting the work from home' and no travel' policies. This...

The industry has seen its RevPAR increase in the first two months of Q3FY20 led by higher occupancy with a marginal fall in ARRs. Various government announcements have augured positively for the sector, namely, reduction in visa charges (that led to growth revival in FTA) and reduction in GST rates for hotels (that led to strong growth in the leisure segment), among others. The industry is said to have seen low demand in December, January owing to unrest in the country followed by the outbreak of the coronavirus, which would adversely impact tourism, FTAs. Looking at the longer term picture,...

ICICI Securities Ltd | Retail Equity Research TajGVK reported a mixed set of Q1FY19 numbers. While revenues remained above estimates, margins contracted during the quarter mainly due to additional expenditure of | 6.6 crore towards renovation of Taj Krishna & Taj Deccan during the quarter The company reported EBITDA of | 12.9 crore (vs. I-direct estimate: | 15.3 crore). Adjusting for renovation expenses, EBITDA margins for the quarter would have remained higher than our estimates at 24.6%...

The hospitality industry has witnessed a long slumber of subdued pricing levels. The recent growth trend of the industry led by a healthy increase in occupancy rates eventually flowing into average room rates increasing are signals of the trend turning around. Additionally, supply that played spoilsport in the past leading to disadvantageous pricing, is expected to slow down in coming years. New room supply is expected to lag demand growth by ~3-4%. This is expected to convert into growth in both occupancy levels as well as ARRs resulting in healthy RevPAR growth. We...

ICICI Securities Ltd | Retail Equity Research TajGVK reported a weak set of Q3FY19 numbers. Revenues stayed below estimates aided by margin contraction. Revenue growth came in at ~4% YoY to | 86.1 crore (below I-direct estimate: | 93.1 crore) On the margins front, EBITDA margins contracted 321 bps to 27.1% YoY (vs. I-direct estimate of 29.9%) led by higher other expenses (up 16.4% YoY) to | 30 crore. EBITDA came in at | 23.3 crore, down ~7% YoY (vs. I-direct estimate of | 27.8 crore)...

EBITDA came in at | 11.6 crore (vs. I-direct estimate: | 15.7 crore). Higher-than-expected operating costs led to a miss on margins. EBITDA margins came in at 16.2% vs. I-direct estimate of 22.1% Despite weak operating margins, PAT remained flat YoY at | 0.9 crore on account of lower interest and tax expenses Occupancy levels to witness sharp improvement in coming years The occupancy in Telangana declined from 59.0% in 2011 to 51.0% in 2015 mainly due to political uncertainty in Andhra Pradesh and Telangana...

ICICI Securities Ltd | Retail Equity Research TajGVK reported a mixed set of Q1FY19 numbers. While revenues remained above estimates, margins contracted during the quarter mainly due to additional expenditure of | 6.6 crore towards renovation of Taj Krishna & Taj Deccan during the quarter The company reported EBITDA of | 12.9 crore (vs. I-direct estimate: | 15.3 crore). Adjusting for renovation expenses, EBITDA margins for the quarter would have remained higher than our estimates at 24.6%...

ICICI Securities Ltd | Retail Equity Research TajGVK reported a good set of Q4FY18 numbers. A key highlight of the quarter was a turnaround in the company's JV Taj Santacruz, which reported net profit of | 2.3 crore. The company's financials were above our estimates on all fronts. Revenues increased 16.5% YoY to | 85.3 crore (above I-direct estimate of | 82.6 crore) The EBITDA margin increased 666 bps YoY to 25.1% (above I-direct estimate of 24.6%) in Q4FY18 led by lower employee expenses...

ICICI Securities Ltd | Retail Equity Research TajGVK reported a good set of Q3FY18 numbers. The key highlight of the quarter was the turnaround in the company's JV Taj Santacruz, which reported a net profit of | 39 lakh for the first time since its commissioning. Revenues increased 14.4% YoY to | 82.9 crore (above I-direct estimate of | 77.0 crore) EBITDA margin increased 376 bps YoY to 30.3% (above I-direct...

On the margin front, the EBITDA margin declined 127 bps YoY to 22.7% (below I-direct estimate of 23.1%) mainly due to a fall in revenues and higher employee expenses (up 7.2% YoY) On a standalone basis, the company reported a net profit of | 2.3 crore. At the consolidated level, net profit was at | 87 lakh mainly due to a loss of | 1.4 crore from Mumbai property (Taj Santacruz) Improving ARR, occupancy in Telangana to drive growth The occupancy in Telangana declined from 59.0% in 2011 to 51.0% in...

Taj GVK reported a mixed set of numbers. While revenues were below our estimates, EBITDA was above our estimate mainly led by a decline in raw material cost and power & fuel cost Revenues increased 2.2% YoY to | 59.6 crore (below I-direct estimate of | 62.2 crore). The EBITDA margin increased 91 bps YoY to 22.6% (above I-direct estimate of 21.2%) in Q1FY18 mainly due to...

ICICI Securities Ltd | Retail Equity Research TajGVK reported a weak set of Q4FY17 numbers. The performance for the quarter was partly hit by demonetisation. Total revenue declined 5.0% YoY to | 73.4 crore (vs. I-direct estimate: | 85.6 crore) EBITDA also declined 40.8% YoY to | 13.4 crore. The EBITDA margin...

Taj GVK Hotels (Taj) is expected to be a key beneficiary of a revival in the economic environment. We believe a slowing down of capacity addition coupled with a rise in spending by domestic travellers will drive occupancy levels over the next few years. Also, with improved tourism measures by the government, the sector may see a better growth trajectory and pricing in the next three to four years. Further, Taj's key market (Telangana) is on the verge of a turnaround, which, we believe, will further drive occupancy. Apart from improving demand we believe...

ICICI Securities Ltd | Retail Equity Research TajGVK reported a mixed set of Q3FY17 numbers. While revenues were below our estimate, EBITDA and PAT were in line with our estimate. Revenues were flat YoY (up 10.6% QoQ) to | 72.5 crore (below I-direct estimate of | 74.9 crore) Healthy occupancy and stable ARR has kept EBITDA margin robust. EBITDA margin increased 142 bps YoY to 26.5% (vs. I-direct estimate of 26.4%) in Q3FY17 mainly due to a decline in other expenses...

ICICI Securities Ltd | Retail Equity Research TajGVK reported an overall good set of numbers for Q2FY17. Total revenue grew 8.9% YoY to | 65.5 crore (vs. I-direct estimate: | 62.1 crore) led by a pick-up in demand from the business segment On the back of the better topline, EBITDA also grew sharply by 39.2% YoY to | 15.7 crore. The EBITDA margin came in at 23.9% (vs. I-direct estimate: 21.9%) compared to 18.7% reported last year During the quarter, the company also booked exceptional income of...

ICICI Securities Ltd | Retail Equity Research TajGVK's results are not directly comparable with our estimates as the company reported standalone numbers vs. our forecasted consolidated numbers. In Q1FY17, standalone revenues de-grew 6.1% YoY (down 24.5% QoQ) to | 58.3 crore EBITDA margins increased 57 bps YoY to 21.7% in Q1FY17 due to a decline in RM cost and other expenses Net profit came in at | 2.5 crore in Q1FY17. However, after adjusting...

TajGVK's results were above our estimates. Revenues grew 22.9% YoY (up 16.4% QoQ) to | 84.3 crore mainly led by addition of Taj Santacruz, pick-up in demand and increase in ARR...