Indian Hotels Q2 Review - V-Shaped Demand Recovery Drives Growth: Nirmal Bang

Nirmal Bang Report

The Q2 FY22 results of Indian Hotels Company Ltd. clearly supported our views of V-shaped recovery in the hospitality sector. The strong demand continues to be driven by staycations, vacations, weddings etc.

IHCL Q2 FY22 revenues increased by ~111% QoQ and ~184% YoY. The QoQ increase was mainly due to

1. Improvement in occupancy in leisure segment from 20% in Q1 FY22 to 51% in Q2 FY22 and non-leisure segment from 30% in Q1 FY22 to 57% in Q2 FY22

2. Average Room Rate for leisure/non-leisure segment increased from Rs 9,098/4,530 in Q1 FY22 to Rs 10,305/Rs 5,697 in Q2 FY22 as lockdown restrictions were eased.

Ebitda margins were 10% in Q2 FY22 compared to (43%) in Q1 FY22 and (59%) in Q2 FY21. The margin expansion was driven by recovery in sales and continued optimisation of costs.

The company reported an adjusted net loss of Rs 1,206 million in Q2 FY22 compared to an adjusted net loss of Rs 2,773 million in Q1 FY22. Adjusted net loss stood at Rs 2,300 million in Q2 FY21.

The management stated over the conference call that they intend to raise Rs 40,000 million funds from the market through rights issues (Rs 20,000 million) and QIP (Rs 20,000 million). The said proceeds will be utilised towards repayment of debt and also towards funding the acquisition of hotels.

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