EIH Ltd - Q4FY20 First Cut - ICICI Securities

(CMP: Rs. 66; MCap: Rs. 3,767 crore)

EIH's Q4FY20 broadly remained ahead of our estimates at operational level after taking into account the impact of covid on the hotel business. However, PAT remained lower than estimates due to impairment in the value of non-current investment to tune of Rs. 16 crore.

Q4FY20 Earnings Summary

- EIH's revenues for the quarter declined ~18.5% YoY to Rs. 351 crore (vs. I-direct estimates of Rs. 316 crore). The lower decline in the quarter comes on a back of healthy performance of its domestic owned hotels during Jan-Feb period (pre-Covid period)

- Owing to lower revenues and negative operating leverage due to higher fixed costs, margins declined by 481bps YoY to 19.5% (vs I-direct estimates of 14.8%) while in the previous quarter, the company reported EBITDA margins of over 28%. On absolute terms, EBITDA for Q4FY20 declined 34.7% YoY to Rs. 68.5 crore (I-direct estimates of Rs. 66.2 crore)

- For the quarter, the company's PAT stood at Rs. 15.6 crore (vs. I-direct estimates of Rs. 17.2 crore), declining 79% QoQ as company made provision of Rs. 16 crore towards impairment in the value of non-current investment in its subsidiary company

The consequences of the COVID-19 outbreak on the Company's business for the quarter have been limited, as business was impacted only in the latter half of March. In view of the continued impact in Q1/FY20, several cost rationalisation measures have been initiated subsequent to the year. Based on enquiries received, and analysis of market trends, the Management expects demand to gradually pick for Domestic leisure and business travel, social events within prescribed norms once airlines are allowed to commence operations fully. Hotels in most locations have been allowed to resume operations effective 8th June, 2020, with the balance expecting to open by 1st July 2020. The Company, despite the unpredictable times, is relatively insulated from the risk of a liquidity crisis owing to its healthy financial position and debt free status.

We would be coming out with a detailed report soon post the conference call.

Shares of EIH LTD. was last trading in BSE at Rs.66 as compared to the previous close of Rs. 66.8. The total number of shares traded during the day was 56372 in over 958 trades.

The stock hit an intraday high of Rs. 69 and intraday low of 65.5. The net turnover during the day was Rs. 3760671.

Source : Equity Bulls

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