EIH Restricted Goal Value (January 2025)

Contents

EIH Ltd – Leaders in luxurious hospitality Merchandise and Companies Funding Rationale Trade Progress Drivers Peer Evaluation Outlook Valuation Danger Recap of our earlier suggestions (As on 10 January 2024)Different articles you could like

EIH Ltd – Leaders in luxurious hospitality

Established in 1949, EIH Ltd. is without doubt one of the largest luxurious resort chains in India. A flagship firm of The Oberoi Group, the corporate owns and operates 30 accommodations, resorts, and luxurious cruisers throughout 7 international locations and 22 cities underneath the model names Oberoi, Trident and Maiden. Along with personal properties, the corporate can also be following an asset gentle mannequin by signing operations and administration contracts with third events. As of FY24, the corporate owns a portfolio of 4,269 keys (owned and managed) throughout all classes. The corporate’s companies additionally embody flight catering, airport lounge, journey planning, company air charters and many others.

Merchandise and Companies

The corporate’s enterprise actions comprise of:

Resort companies – Lodging, meals & beverage and different companies supplied by resort, inns, resorts, vacation properties, eating places, caterers, and many others.
Actual Property Actions – Renting of funding properties.

Subsidiaries: As of FY24, the corporate has 9 subsidiaries, 3 affiliate firms and three joint ventures.

Funding Rationale

Enlargement plans – EIH plans to open 20 new properties, totalling 1,350 keys, by 2029. The portfolio will embody a mixture of accommodations, boats, and cruises throughout each home and worldwide markets, both owned outright or developed via joint ventures and partnerships. The growth additionally includes the creation of mixed-use developments with industrial, retail, and F&B areas. Within the home market, three accommodations are set to open in 2025 and 2026. Internationally, the corporate goals to launch two accommodations, two luxurious boats, and a cruiser throughout the identical timeframe. Notably, EIH is coming into the London market with a luxurious resort in Mayfair, exploring partnership alternatives to scale back its publicity. This 21-key resort is slated to open in 2028. These growth efforts are anticipated to drive profitability, strengthen the model, and help a various and sustainable enterprise mannequin for the corporate.

Sturdy operational efficiency – The corporate noticed notable development in RevPAR (Income per Out there Room) throughout all its enterprise segments. In Q2FY25, in comparison with the identical interval final 12 months, Oberoi Metro noticed a ten% improve, Oberoi Leisure improved by 7%, and each Trident Metro and Trident Leisure rose by 22% every. Occupancy charges grew from 69% to 72%, whereas the Common Room Charge (ARR) rose to Rs.14,973 within the final quarter, in comparison with the Rs.13,732 throughout the identical interval within the earlier 12 months. Total, these efficiency positive factors replicate the corporate’s operational success, market energy, and monetary stability, setting the stage for continued development and profitability.

Q2FY25 – EIH reported its highest ever quarterly income and revenue in the course of the interval. The corporate generated income of Rs.589 crore marking a rise of 11% in comparison with the Rs.531 crore income of Q2FY24. EBITDA stood at Rs.208 crore in opposition to the Rs.165 crore of Q2FY24, a development of 26% YoY. Web revenue stood at Rs.133 crore which is a development of 41% as in comparison with the Rs.94 crore of the identical interval within the earlier 12 months. The corporate is money optimistic with ~Rs.711 crore.

FY24 – The corporate generated income of Rs.2,317 crore, a rise of 26% in comparison with FY23 income. Working revenue is at Rs.911 crore, up by 46% YoY. The corporate posted a web revenue of Rs.521 crore, a rise of 63% YoY. FY24 working revenue margin is at 39% and web revenue margin is at 22%.
Monetary Efficiency – EIH has generated income and web revenue CAGR of 72% and 56% over the interval of three years (FY21-24). The typical 3-year ROE & ROCE is round 9% and 12% for the FY21-24 interval. The corporate has a powerful stability sheet with a sturdy debt-to-equity ratio of 0.05.

Trade

Tourism and Hospitality is one the biggest service industries in India, enjoying a vital function in driving the nation’s development and prosperity. With its numerous geography and wealthy cultural heritage, India affords a variety of distinctive experiences, positioning it as one of many prime locations for worldwide tourism spending. By 2028, the sector is projected to generate over US$ 59 billion in income, with International Vacationer Arrivals (FTAs) anticipated to succeed in 30.5 million. In response to the World Journey and Tourism Council (WTTC), India’s Journey & Tourism GDP is anticipated to develop at a median charge of seven.1% yearly over the subsequent decade. The nation is eyeing for additional growth within the sector via initiatives comparable to wellness tourism, culinary tourism, and eco-tourism.

Progress Drivers

Authorities initiatives like Swadesh Darshan 2.0, e-visa services, RCS-UDAN Scheme that had been launched to energy the sustainable imperatives within the tourism sector.
100% International Direct Funding (FDI) allowed within the tourism business underneath automated route.
Within the Interim Price range 2024, Rs.2,449.62 crore (US$ 294.8 million) was allotted to the tourism sector.

Peer Evaluation

Rivals: Chalet Lodges Ltd, Lemon Tree Lodges Ltd, and many others.

In comparison with the above opponents, EIH is probably the most undervalued inventory with sturdy returns on the capital invested and wholesome development in gross sales.

Outlook

The corporate’s growth technique, which incorporates 20 properties throughout key international and home markets, reveals sturdy potential. These efforts are anticipated to drive income development, broaden geographic attain, and diversify the corporate’s market presence. The corporate plans to increase its portfolio of mixed-use growth tasks, incorporating each residential and industrial areas, which is predicted to spice up returns and profitability. It anticipates improved income and profitability within the second half of FY25. Moreover, the corporate goals so as to add roughly 216 keys in 2025 and 2026.

Valuation

The corporate’s steady operational efficiency and upcoming growth plans are anticipated to maintain its development momentum. We suggest a BUY ranking within the inventory with the goal worth (TP) of Rs.488, 39x FY26E EPS.

Danger

Macroeconomic elements – Any financial slowdown within the nation could affect the demand for the journey business thereby impacting the corporate turnover.

Launch of recent accommodations – Any delay within the launch of recent accommodations/cruises will affect profitability.

Notice: Please observe that this isn’t a suggestion and is meant just for instructional functions. So, kindly seek the advice of your monetary advisor earlier than investing.