In s titu tio n a l E q u itie s

Hotel Sector
23 September, 2021

Strong recovery seen in 2QFY22 Amit Agarwal

Our optimism on the Hospitality sector, supported by the recent anecdotal evidence in July-Sept 2021, is in sync with the Research Analyst
expert opinion we received in the recently attended zoom call hosted by ICRA with Mr. Giridhar Sanjeevi (Executive VP amit.agarwal@nirmalbang.com
and CFO of IHCL) and Mr. Sanjay Sethi (MD of Chalet Hotels). +91-22-6273 8033
The speakers stated that though demand is led by leisure (staycations, workations, weddings etc), there is evidence of
resumption of corporate travel and MICE events too (Jewellery Show in Bengaluru). However, resumption of foreign
travel will take time to revive in spite of the recent press reports indicating opening up India to foreign guests. Given the
strong spurt in demand, the occupancy level has reached more than 50% in July-Sept 2021 in most cities.
However, given the sharp drop in RevPar in the past year, majority of the companies in the sector will continue to report
operating losses, albeit lower than previous quarters. A lower revenue base (amid covid-led health crisis) and under-
absorption of certain fixed costs are leading to negative operating leverage.
Sector Update

The key takeaways are:

1. Demand challenges, led by lower occupancy levels, which remained at ~32-34% in 5MFY22 (compared to
occupancy of 13-15% in 5MFY21) and ~46-48% in 4QFY21. July-Sept 2021 period has seen a strong pick-up in
demand.
2. Pan-India ARR stood at Rs3,850-3,950 in 5MFY22 and is expected to improve given the ongoing festive season and
upcoming wedding season.
3. Consolidation of unorganized players into organized players.
4. Operating and credit metrics will continue to remain affected but are improving continuously.
5. Full occupancy to pre-covid level is expected in FY23-FY24, which will improve the industry’s operating and credit
metrics going forward.
We retain our Buy rating on IHCL, EIH and Chalet and Accumulate rating on Lemon Tree. We have introduced FY24E
estimates in this report (EIH, Chalet and Lemon Tree) and have rolled our valuation base from FY23E to the mid-point of
FY23E-FY24E.
Consequently, we have valued IHCL at 17x FY23E/FY24E midpoint of EV/EBITDA and arrived at a target price (TP) of
Rs230 (earlier Rs192). EIH is valued at 17x FY23E/FY24E midpoint of EV/EBITDA with a TP of Rs156 (earlier Rs140).
Chalet has been valued using the SOTP method, with the hospitality segment valued at 11x midpoint of FY23E/FY24E
EV/EBITDA and a TP of Rs254 (earlier Rs238). Lemon Tree has been valued at 17x midpoint of FY23E/FY24E EV/EBITDA
with a TP of Rs48 (earlier Rs44).
Challenges faced by the hotel industry: The Indian hotel industry experienced a strong downturn in FY21 and the RevPar declined to as
low as Rs3,600-3700 compared to Rs5,800-5,900 in FY20 and Rs7,223 in FY19 due to restrictions in domestic and international travel
amid the covid-led disruption and the evolving nature of the pandemic (see exhibit 3). International travel had suffered badly in 5MFY21 as
it was restricted to only business and education purposes. Only limited flights were operated under the government’s ‘air bubble’
arrangement. Suspension of international flights has been extended until 30th Sept’21, thereby affecting demand from foreign travelers.
ICRA has highlighted that occupancy at the pan-India level for hotels was ~32-34% in 5MFY22 compared to 13-15% in 5MFY21 and ~48%
in 4QFY21. Occupancy level improved sharply in Aug’21, led by recovery in leisure travel due to: (1) easing of lockdown restrictions post
the second covid wave (2) onset of the festive season (3). rising staycation demand (4) upcoming wedding season and (5) revenge travel.
In terms of regions, occupancy level for all the markets, including Chennai, Delhi, Gurugram, Mumbai, Hyderabad and Jaipur was more
than 50% in July’21. Goa eased restrictions in Aug’21 while Bengaluru and Pune remained weak as they are primarily business
destinations.
Leisure drives demand; green-shoots in corporate travel and MICE: Demand drivers for the hotel industry continue to be staycations,
vacations, bizcations, weddings, sports events, seafarers etc. Branded hotels are being preferred as consumers want trustworthy names
for: (1) Safety and hygiene (2) Automation in bookings, checkouts and orders (3) Bigger space and (4) Vaccinated staff and guests. The
hotel industry has also witnessed certain structural changes, led by the changes in travel pattern and guest behavior during the pandemic.
The speakers indicated that in the recent past, corporate travel has also resumed and is expected to increase sharply post Diwali when
most offices are expected to re-open. MICE events have also started (Jewellery Show in Bangalore and Aero India in Pune) and are
expected to increase if there are no further covid-led shocks.
New supply to decline - consolidation to help organized players: Historically, new supply has grown at a CAGR of 5% in the past 5
years. Post the pandemic, supply growth for the next 5 years is expected at a CAGR of 2.5%. The speakers stated that while in some
cases the upcoming supply has been deferred, in other cases, it has been converted into another asset class. Consequently, the demand-
supply scenario is expected to remain favorable.
The speakers stated that the ongoing pandemic will lead to many opportunities in the M&A space and eventually organized players will
gain market share. Leveraged balance sheet and loss of revenues due to covid will force smaller players to monetize assets or merge with
larger players. This will result in consolidation in the industry and disciplined average room rates in the long run.
Covid led to weak financials: (1) Majority companies in the hotel industry opted for restructuring due to higher operating losses and high
leverage. They withdrew their applications following ECLGS 2.0 announcement in Nov’20
2. The industry reported 56% QoQ decline in revenue in 1QFY22 (see exhibit no 4), but the same is expected to improve going forward,
led by the onset of the festive season, revenge travel and leisure travel.
3. The sector has reported operating losses amid a low revenue base (due to covid) and under-absorption of fixed costs leading to
negative operating leverage (see exhibit no 5). However, this has been offset by certain cost control measures such as (1) Lower room-to-
staff ratio (2) Lower power costs and (3) Reduction in certain overhead expenses due to adoption of automation.
4. The industry will rely on fresh funds from promoters and debt & equity markets to meet their working capital and ongoing capital
expenditure requirements, which may result in leverage remaining high at ~3.8-4x. Banks will be reluctant to give fresh funds to smaller
players for new projects and for the projects which have been stalled given the uncertainty around demand and high leverage. Interest
coverage ratio stood at -1.3x in 1QFY22, owing to operational losses (see exhibit no 6).
 In s titu tio n a l E q u itie s

Key metrics for the hospitality sector:

Occupancy: The outbreak of covid-19 and the subsequent imposition of lockdowns (1st and 2nd wave)
severely impacted the occupancy level across hotels. Overall occupancy fell from 70.5% in Jan’20 to as low as
11.7% in Apr’20, a sharp decline (as shown in Exhibit 1). However, there was a gradual improvement in
occupancy level from 11.7% in Apr’20 to 55% in Feb’21, led by (1) Resumption in domestic and international
flights as economic activities resumed post the easing of the first lockdown (2) Recovery in domestic leisure
travel as people started to step out for weekend getaways and staycations (3) Relaxation in restrictions on
social gatherings during festivals and weddings also aided the recovery in occupancy level and (4) Gradual
resumption in business travel due to the faster vaccination drive.
Exhibit 1: Occupancy is showing an upswing post 2nd covid wave

80%
70.5% 73.5%
70%

60% 55.0%
47.0%
50%
36.8%
40%
30.5% 31.3% 28.0%
30% 24.5%
31.0% 20.8% 20.9%
20% 14.3% 14.4%
25.5%
22.8%
10%
11.7%
11.9%
0% Sept'20
Aug'20
Jan'20

Jan'21

Jun'21
Jun'20

Jul'20

Jul'21
May'21
May'20
Mar'20

Mar'21
Feb'20

Feb'21
Apr'20

Apr'21
Oct'20

Nov'20
Source: Care ratings

Average domestic rate and average RevPar: The average domestic rate (ADR) for the hotel industry
declined from Rs6,560 in Jan’20 (pre-covid level) to Rs3,140.70 in June’20. Average RevPar declined from
Rs4,620 in Jan’20 (pre-covid level) to Rs653 in June’20. The decline was mostly led by the outbreak of covid-
19 globally, the subsequent national lockdown imposed by GOI in the last week of Mar’20 and a complete ban
on international travel. As a result, there was no arrival of foreign tourists in the country. Domestic tourism also
declined as business and leisure travels were impacted badly. Majority of the corporates conducted their
businesses online through video calls during the lockdown and people who wished to travel for leisure purpose
had to remain confined in their homes.
However, there was some recovery in ADR and Average RevPar from Rs3,252 and Rs492 in May’21,
respectively to Rs4,200 and Rs2,017 in July’21. This was primarily due to increasing demand post the second
covid wave in India (see Exhibit 2), resulting from relaxation in lockdown restrictions.
Exhibit 2: ADR and Average RevPar showing an improving trend from May’21
7,000

6,000

5,000

4,000

3,000

2,000

1,000

0
Aug'20
Jan'20

Jun'20

Jan'21

Jun'21
Sept'20
May'20

May'21
Jul'20

Jul'21
Mar'20

Mar'21
Feb'21
Feb'20

Oct'20
Apr'20

Apr'21
Nov'20

Average ADR (in Rs) Average RevPar (in Rs)

Source: Care ratings

2 Hotel Sector Update

 In s titu tio n a l E q u itie s

Exhibit 3: RevPar Exhibit 4: Revenue and revenue growth

(Rs) (Rsmn) (%)
RevPar (in Rs)
8,000 35,000 200%
6994 7223
6,885 30,000
7,000 150%
5800-5900 25,000
6,000 100%
20,000
5,000 50%
15,000
4,000 3600-3700 0%
10,000
3,000 5,000 -50%

2,000 0 -100%

1QFY20

2QFY20

4QFY20

1QFY21

2QFY21

3QFY21

1QFY22
3QFY20

4QFY21
1,000

0
FY17 FY18 FY19 FY20 FY21 Revenue (Rs mn) Revenue growth (%)

Source: ICRA Rating Source: ICRA Rating

Exhibit 5: Operating margin and net profit margin Exhibit 6: Interest coverage ratio
60% Interest coverage (in x)
5
40%
20% 4
0%
2QFY20

3QFY20

4QFY20

2QFY21

3QFY21

4QFY21
1QFY20

1QFY21

1QFY22

-20% 3
-40%
-60% 2
-80%
-100% 1
-120%
-140% 0
1QFY20

2QFY20

3QFY20

4QFY20

1QFY21

2QFY21

3QFY21

4QFY21

1QFY22
-160%
-1
-180%
-200% -2
-220%
Operating margins (%) Net profit margin (%) -3

Source: ICRA Rating Source: ICRA Rating

3 Hotel Sector Update

 In s titu tio n a l E q u itie s

Exhibit 7: Change in our Estimates

EIH Ltd.
(Rs in mn) Earlier Actual/Revised Change (bps / %)
Particulars FY22E FY23E FY22E FY23E FY24E FY22E FY23E
Revenues 8694 19478 8628 19395 20201 -0.8% -0.4%
EBIDTA 949 5545 956 5,516 5,923 0.7% -0.5%
EBIDTA Margins 10.92% 28.4% 11.1% 28.4% 29.3% 0.2% 0.0%
EBIT -815 3664 -797 3647 4020 -2.2% -0.5%
EBIT Margins -9.4% 18.8% -9.2% 18.8% 19.9% 0.2% 0.0%
Adjusted PAT -307 4,235 -448 3,074 3,374 45.8% -27.4%
EPS (in Rs) -0.49 6.77 -0.72 4.92 5.39 46.1% -27.4%
Source: Company, Nirmal Bang Institutional Equities Research

The decline in Adjusted PAT is mainly due to decline in other income.

Chalet Hotels
(Rs in mn) Earlier Actual/Revised Change (bps / %)
Particulars FY22E FY23E FY22E FY23E FY24E FY22E FY23E
Revenues 7790 10221 7674 9690 10785 -1.5% -5.2%
EBIDTA 2411 3515 2,851 3,836 4,288 18.3% 9.1%
EBIDTA Margins 30.95% 34.39% 37.1% 39.6% 39.8% 6.2% 5.2%
EBIT 1092 2149 1564 2502 2902 43.2% 16.4%
EBIT Margins 14.01% 21% 20.4% 25.8% 26.9% 6.4% 4.8%
Adjusted PAT 232 1,005 324 1,078 1,527 39.7% 7.3%
EPS (in Rs) 1.13 4.9 1.58 5.26 7.45 39.9% 7.3%
Source: Company, Nirmal Bang Institutional Equities Research

EBITDA has increased mainly due to reduction in employee cost, driven by lower employee-to-room ratio. EBIT
and adjusted PAT are expected to increase in FY22 mainly on account of lower depreciation expenses amid
expectation that there will be a delay in the commencement of 2 hotels (W, Powai and Hyatt Regency Airoli).

Lemon Tree
(Rs in mn) Earlier Actual/Revised Change (bps / %)
Particulars FY22E FY23E FY22E FY23E FY24E FY22E FY23E
Revenues 4316 8598 4316 6871 9085 0.0% -20.1%
EBIDTA 1668 4114 1,668 3,047 4,147 0.0% -25.9%
EBIDTA Margins 38.6% 47.85% 38.6% 44.3% 45.6% 0.0% -3.5%
EBIT 593 2685 593 1761 2720 -0.1% -34.4%
EBIT Margins 0.1373957 31% 13.7% 25.6% 29.9% 0.0% -5.6%
Adjusted PAT -6 1,589 -6 1,086 2,368 -0.6% -31.6%
EPS (in Rs) -0.01 2 -0.01 1.40 3.00 0.0% -30.0%
Source: Company, Nirmal Bang Institutional Equities Research

Lemon Tree: 1. We have reduced the expected increase in ARR in FY23 from 30% to 25%. Further, we have
also reduced the occupancy rate from 75% to 70% in FY23.
2. Decline in EBITDA, EBIT and Adjusted PAT in FY23 is due to lower revenue base and cost from F&B
business rising by 73%. Whereas, direct cost for liquor & wines increased by 57%.

4 Hotel Sector Update

 In s titu tio n a l E q u itie s

Exhibit 8: Summary financials

IHCL
Y/E March (Rsmn) FY20 FY21 FY22E FY23E FY24E
Revenues 44,631 15,752 32,651 53,401 57,139
YoY (%) (1.1) (64.7) 107.3 63.6 7.0
EBITDA 9,675 (3,618) 515 17,434 19,284
EBITDA Margin (%) 21.7 (23.0) 1.6 32.6 33.7
PAT 3,508 (6,942) (5,400) 7,459 10,081
Adjsuted PAT 3,544 (7,201) (6,249) 6,043 8,504
YoY (%) 23.6% NA -13.2% -196.7 40.7%
EPS (Rs) 2.98 (6.05) (5.25) 5.08 7.15
RoE (%) 8.1 (19.7) (22.7) 18.0 20.2
EV/EBITDA (x) 24.4 (68.2) 489.0 14.2 12.3
P/E (x) 58.1 (28.6) (32.9) 34.0 24.2
Source: Company, Nirmal Bang Institutional Equities Research

EIH Limited
Y/E March (Rsmn) FY20 FY21 FY22E FY23E FY24E
Revenues 15,963 4,971 8,628 19,395 20,201
YoY (%) (11.8) (68.9) 73.6 124.8 4.2
EBITDA 2,903 (2,919) 956 5,516 5,923
EBITDA Margin (%) 18.2 (58.7) 11.1 28.4 29.3
PAT 1,653 (3,146) (452) 3,105 3,408
YoY (%) 20.9 (290.4) 85.6 786.9 9.8
Adjusted PAT 1,488 (3,697) (448) 3,074 3,374
YoY (%) 13.1 (348.4) 87.9 786.9 9.8
EPS (Rs) 2.6 (5.9) (0.7) 4.9 5.4
RoE (%) 4.7 (11.9) (1.5) 9.6 9.7
EV/EBITDA (x) 23.4 (24.9) 78.0 12.9 11.7
P/E (x) 42.6 NA NA 22.6 20.6
Source: Company, Nirmal Bang Institutional Equities Research

Lemon tree
Y/E March (Rsmn) FY20 FY21 FY22E FY23E FY24E
Revenues 6,694 2,517 4,316 6,871 9,085
YoY (%) 22 -62 71.5 59.2 32.2
EBITDA 2,383 613 1,668 3,047 4,147
EBITDA Margin (%) 35.6 24.3 38.6 44.3 45.6
PAT -104 -1,826 -559 536 1,820
YoY (%) (118.69) 1,657.50 (69.40) (195.87) 239.74
Adjusted PAT -95 -1,271 -6 1,086 2,368
YoY (%) (118.03) 1,232.87 (99.53) NA 118.01
EPS (Rs)* (0.12) (1.61) (0.01) 1.4 3.0
RoE (%) -1.2 -13.9 -0.1 10.6 18.8
EV/EBITDA (x) 23.0 88.2 33.6 18.2 13.4
P/E (x) NA NA NA 29.8 13.7
Source: Company, Nirmal Bang Institutional Equities Research

5 Hotel Sector Update

 In s titu tio n a l E q u itie s

Chalet
Y/E March (Rsmn) FY20 FY21 FY22E FY23E FY24E
Revenues 9,811 2,944 7,674 9,690 10,785
YoY (%) (0.6) (70.0) 160.7 26.3 11.3
EBITDA 3,366 71 2,851 3,836 4,288
EBITDA Margin (%) 34.3 2.4 37.1 39.6 39.8
PAT 996 (1,391) 324 1,078 1,527
YoY (%) NA (239.7) NA 232.7 41.6
EPS (Rs) 5.0 (6.8) 1.6 5.3 7.4
RoE (%) 6.0 (9.1) 2.0 6.0 7.6
EV/EBITDA (x) 16.4 815.3 19.2 14.0 12.2
P/E (x) 37.56 NA 118.99 35.76 25.26
Source: Company, Nirmal Bang Institutional Equities Research

6 Hotel Sector Update

 In s titu tio n a l E q u itie s

Financial statement: IHCL

Exhibit 9: Income statement Exhibit 10: Cash flow
Y/E March (Rs mn) FY20 FY21 FY22E FY23E FY24E Y/E March (Rsmn) FY20 FY21 FY22E FY23E FY24E
Net sales 44,631 15,752 32,651 53,401 57,139 Profit after Tax 3,544 (7,201) (6,249) 6,043 8,504
Growth YoY (%) (1.1) (64.7) 107.3 63.6 7.0
Depreciation 4,042 4,096 4,879 5,054 5,229
COGS 3,706 1,438 1,825 4,051 4,254
Finanace costs 3,411 4,028 4,583 4,228 2,490
Operating Costs 17,645 10,669 18,437 19,359 20,327
Other expenses 13,606 7,262 11,873 12,556 13,274 Other Income 1,324 1,647 1,730 1,816 1,907
EBITDA 9,675 (3,618) 515 17,434 19,284 Others - - - - -
EBITDA growth (%) 16.6 (137.4) (114.2) 3,283.0 10.6 Working capital changes (4,836) 1,027 599 (2,179) 71
EBITDA margin (%) 21.7 (23.0) 1.6 32.6 33.7 Operating Cash Flow 4,838 304 2,082 11,329 14,387
Depreciation 4,042 4,096 4,879 5,054 5,229 Capital Expenditure (5,542) (7,665) (1,842) (4,700) (2,300)
EBIT 5,633 (7,714) (4,363) 12,380 14,056
Net Cash After Capex (704) (7,362) 240 6,629 12,087
EBIT (%) 12.6 (49.0) (13.4) 23.2 24.6
Other income/(expense) 2,480 2,281 1,430 1,502 1,577
Interest expense 3,411 4,028 4,583 4,228 2,490
Issue/(Buyback of Equity) - - - - -
Other income 1,324 1,647 1,730 1,816 1,907
Exceptional Items 410 1,600 - - - Proceeds/Repayment of borrowings 2,761 10,308 5,000 (3,200) (7,000)
Earnings before tax 3,955 (8,495) (7,216) 9,968 13,472 Finance costs (3,411) (4,028) (4,583) (4,228) (2,490)
Tax- total 448 (1,553) (1,816) 2,509 3,391 Others 2,093 (454) 254 1,314 1,371
Rate of tax (%) 11.3 18.3 25.2 25.2 25.2 Cash flow from Financing 1,443 5,826 671 (6,114) (8,119)
Net profit 3,508 (6,942) (5,400) 7,459 10,081 Total Cash Generation 3,219 745 2,342 2,017 5,545
Profit/Loss Attributable to (93) 755 216 (298) (403)
minority Opening Cash Balance 2,409 3,156 1,536 1,420 1,936
Share ofinterest
Profits and losses 130 (1,014) (1,065) (1,118) (1,174)
from Associates Closing Cash & Bank Balance 3,156 1,536 1,420 1,936 5,904
PAT 3,544 (7,201) (6,249) 6,043 8,504
% growth 23.6% NA (13.2) (196.7) 40.7 Source: Company, Nirmal Bang Institutional Equities Research
EPS (FD) 2.98 (6.05) (5.25) 5.08 7.15
% growth 24% NA NA (196.7) 40.7
Net DPS 0.40 0.50 - - -
Net Payout ratio (%) 13.5 (8.3) - - - Exhibit 12: Key ratios
* Adjusted PAT - After minority interest and Share of associates and JV Y/E March FY20 FY21 FY22E FY23E FY24E
Source: Company, Nirmal Bang Institutional Equities Research Profitability and return ratios
Exhibit 11: Balance sheet EBITDA margin (%) 21.7 (23.0) 1.6 32.6 33.7
Y/E March (Rs mn) FY20 FY21 FY22E FY23E FY24E EBIT margin (%) 12.6 (49.0) (13.4) 23.2 24.6
Share capital 1,189 1,189 1,189 1,189 1,189 Net profit margin (%) 7.9 (45.7) (19.1) 11.3 14.9
Reserves and surplus 42,379 35,295 26,392 32,435 40,939
RoE(%) 8.1 (19.7) (22.7) 18.0 20.2
Net worth 43,568 36,485 27,581 33,624 42,128
Loans 26,021 36,328 41,328 38,128 31,128 RoCE (%) 8.1 (10.6) (6.3) 17.3 19.2
Lease Liabilities 18,987 18,855 18,620 18,366 18,091 Working capital and liquidity ratios
Minority Interest 7,649 6,346 6,346 6,346 6,346
Provisions 1,211 917 963 1,011 1,062 Recievables (days) 24 51 19 30 30
Deferred Tax Liability 1,869 781 820 861 904 Inventory (days) 51 50 32 40 40
Other Non- Current Liability 2,194 347 364 382 401
Payables (days) 211 172 125 120 120
Total capital employed 101,499 100,058 96,022 98,718 100,060
Goodwill on consolidation 6,146 6,110 6,110 6,110 6,110 Current ratio (x) 1.1 0.8 0.7 0.9 1.1
Property, Plant & Equipment 61,051 64,620 61,583 61,921 59,685 Valuation ratios
Right to use 15,833 15,297 14,606 13,914 13,222
Investments 9,904 10,345 10,345 10,345 10,345 EV/sales (x) 5.3 15.7 7.7 4.6 4.2
Loans and Advances 167 51 51 51 51 EV/EBITDA (x) 24.4 (68.2) 489.0 14.2 12.3
Other Non-Current Assets 7,710 7,166 7,524 7,900 8,295 P/E (x) 58.1 (28.6) (32.9) 34.0 24.2
Total Non-Current Assets 100,810 103,588 100,218 100,241 97,707
Trade Payables 3,893 3,178 2,842 3,566 3,745 P/BV (x) 4.7 5.6 7.5 6.1 4.9
Advance from customers - - - - - Source: Company, Nirmal Bang Institutional Equities Research
Other current liabilities 8,246 10,114 10,619 11,150 11,708
Provisions (Current) 1,545 1,708 1,793 1,883 1,977
Total Current Liabiities 13,684 14,999 15,254 16,599 17,429
Inventories 936 929 727 1,189 1,248
Investments 4,362 4,486 4,711 4,946 5,193
Trade receivables 2,900 2,198 1,700 4,389 4,696
Cash and Bank Balance 3,156 1,536 1,420 1,936 5,904
Loans and Advances 48 167 167 167 167
Other Current Assets 2,971 2,222 2,333 2,450 2,572
Total Current Assets 14,373 11,539 11,058 15,077 19,782
Net Current Assets 689 (3,461) (4,196) (1,523) 2,352
Total Capital Employed 101,499 100,128 96,022 98,718 100,060
Source: Company, Nirmal Bang Institutional Equities Research

7 Hotel Sector Update

 In s titu tio n a l E q u itie s

Financial statements: Chalet

Exhibit 13: Income statement Exhibit 14: Cash flow
Y/E March (Rsmn) FY20 FY21 FY22E FY23E FY24E Y/E March (Rsmn) FY20 FY21 FY22E FY23E FY24E
Net sales 9,811 2,944 7,674 9,690 10,785 Profit after tax 1,027 (1,391) 324 1,078 1,527
Growth YoY (%) -0.6 -70.0 160.7 26.3 11.3
Depreciation 1,133 1,175 1,287 1,334 1,386
Operating costs 4,607 1,884 3,799 4,637 4,990
Other expenses Finance costs 1,462 1,520 1,631 1,471 1,231
1,838 989 1,025 1,216 1,507
EBITDA 3,366 71 2,851 3,836 4,288 Other income (279) (223) (551) (579) (608)
EBITDA growth (%) 5.4 (97.9) 3,942.9 34.6 11.8 Others 45 82 - - -
EBITDA margin (%) 34.3 2.4 37.1 39.6 39.8 Working capital changes (551) (1,089) 718 (257) (303)
Depreciation 1,133 1,175 1,287 1,334 1,386
Operating cash flow 2,837 74 3,409 3,048 3,233
EBIT 2,233 -1,104 1,564 2,502 2,902
EBIT (%) Capital expenditure (4,321) (1,782) 2,232 (1,565) (1,722)
22.8 -37.5 20.4 25.8 26.9
Interest expense 1,462 1,520 1,631 1,471 1,231 Cash Flow from Investments (649) 206 (59) (62) (65)
Other income 279 223 551 579 608 Other income 279 223 551 579 608
Others (42) (82) - - - Net cash after capex (1,855) (1,279) 6,134 1,999 2,053
Earnings before tax 1,008 (2,483) 484 1,610 2,279
Issue/(buyback of equity) 590 87 - - -
Tax- total 12 (1,092) 160 531 752
Proceeds/repayment of
Rate of tax (%) 1.2 44.0 33.0 33.0 33.0 2,972 1,458 980 (1,991) (2,996)
borrowings
Net profit 996 (1,391) 324 1,078 1,527
Finance costs (1,462) (1,417) (2,298) (1,075) (1,206)
Minority Interest (30) (1) - - -
Others 206 329 (1,069) 535 400
Adjusted Net Profit 1,027 (1,391) 324 1,078 1,527
% growth NA NA NA 232.7% NA Cash flow from financing 2,307 457 (2,387) (2,532) (3,802)
EPS (FD) 5.01 (6.78) 1.58 5.26 7.45 Total cash generation 452 (822) 3,746 (533) (1,748)
% growth NA NA NA NA NA Opening cash balance 827 1,279 458 4,140 3,126
Source: Company, Nirmal Bang Institutional Equities Research Closing cash & bank balance 1,279 457 4,204 3,608 1,378

Exhibit 15: Balance sheet Source: Company, Nirmal Bang Institutional Equities Research
Y/E March (Rsmn) FY20 FY21 FY22E FY23E FY24E
Equity Share capital 2,050 2,050 2,050 2,050 2,050 Exhibit 16: Key ratios
Prefrence Share Capital 1,108 1,195 1,195 1,195 1,195
Y/E March FY20 FY21 FY22E FY23E FY24E
Reserves and surplus 13,495 12,110 13,189 14,715 16,717
Net worth 16,653 15,355 16,434 17,960 19,962 Profitability and return ratios
Minority Interest (3) (3) - - - EBITDA margin (%) 34.3 2.4 37.1 39.6 39.8
Loans 17,907 19,389 20,389 18,389 15,389 EBIT margin (%) 22.8 -37.5 20.4 25.8 26.9
Other Financial Liabilities: 198 191 192 193 194 Net profit margin (%) 10.2 (47.3) 4.2 11.1 14.2
Provisions 76 76 55 63 66 RoE (%) 6.0 (9.1) 2.0 6.0 7.6
Deferred tax liability 222 138 138 138 138
RoCE (%) 6.5 (3.2) 4.2 6.9 8.2
Other non-current liability 133 110 111 112 113
Working capital & liquidity ratios
Total capital employed 35,188 35,255 37,318 36,854 35,861
Goodwill 226 226 226 226 226 Recievable (days) 15.5 26.8 20.5 20.0 20.0
Inventory (days) - Food, beverages
Property, plant and equipment 30,839 30,929 29,968 30,199 30,536 24.6 79.9 500.0 450.0 450.0
and Smoke
Non Current Investments 45 45 45 45 45
Payable (days) 134.2 340.2 200.0 200.0 200.0
Loans 113 109 115 120 126
Current ratio (x) 1.3 1.2 1.7 1.6 1.3
Other non-current assets 2,326 3,028 3,078 3,130 3,185
Total non-current assets 33,550 34,337 33,432 33,721 34,119 Valuation ratios
Trade payables 1,062 829 1,425 1,802 1,961 EV/sales (x) 5.6 19.5 7.1 5.6 4.9
Other current liabilities 2,989 2,895 2,897 2,899 2,902 EV/EBITDA (x) 16.4 815.3 19.2 14.0 12.2
Provisions (current) 889 909 910 911 912 P/E (x) 37.6 NA 118.9 35.8 25.3
Total current liabilities 4,940 4,633 5,233 5,613 5,775 P/BV (x) 2.3 2.5 2.3 2.1 1.9
Inventories 3,924 3,912 3,563 4,055 4,412
Source: Company, Nirmal Bang Institutional Equities Research
Trade receivables 417 216 431 531 591
Cash and bank balance 1,279 458 4,140 3,126 1,428
Loans and advances 31 72 75 79 83
Other current assets 927 893 909 954 1,002
Total current assets 6,578 5,551 9,118 8,746 7,517
Net current assets 1,638 918 3,886 3,133 1,742
Total capital employed 35,188 35,255 37,318 36,854 35,861
Source: Company, Nirmal Bang Institutional Equities Research

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 In s titu tio n a l E q u itie s

Financial statement: Lemon tree

Exhibit 17: Income statement Exhibit 18: Cash flow
Y/E March (Rsmn) FY20 FY21 FY22E FY23E FY24E Y/E March (Rsmn) FY20 FY21 FY22E FY23E FY24E
Net sales 6,694 2,517 4,316 6,871 9,085 Profit after Tax (95) (1,271) (6) 1,086 2,368
Growth YoY (%) 21.8 -62.4 71.5 59.2 32.2
Depreciation 872 1,216 1,216 1,426 1,566
COGS/Direct Expenses 1,455 567 878 1,424 1,895
Operating Costs 1,955 870 1,209 1,507 1,862 Finance costs 1,616 1,905 1,953 2,015 1,479
Other expenses 901 468 561 893 1,181 Other income 58 133 139 146 153
EBITDA 2,383 613 1,668 3,047 4,147 Working capital changes 138 (449) 85 154 190
EBITDA growth (%) 41.2 -74.3 172.3 82.7 36.1 Operating Cash Flow 2,472 1,268 3,109 4,535 5,450
EBITDA margin (%) 35.6 24.3 38.6 44.3 45.6
Capital Expenditure (7,853) (788) (3,188) (395) (2,590)
Depreciation 872 1,076 1,076 1,286 1,426
EBIT 1,512 -463 593 1,761 2,720 Net Cash After Capex (5,381) 480 (78) 4,140 2,860
EBIT (%) 22.6 -18.4 13.7 26 30 Other income/(expense) 581 2,167 14 20 127
Interest expense 1,616 1,905 1,573 1,643 1,479 Issue/(Buyback of Equity) 10 1 - - -
Other income 58 133 139 146 153 Proceeds/Repayment of borrowings 3,592 1,303 1,500 1,200 3,200
Others 51 87 134 414 909
Finance costs 1,616 1,905 1,953 2,015 1,479
Earnings before tax 5 -2,148 -707 678 2,304
Dividend and Dividend Distribution
Tax- total 109 -322 -149 142 484 - - - - -
Tax
Rate of tax (%) 2,221.3 15.0 21.0 21.0 21.0
Others 2,896 (1,044) (0) (1,480) 400
Net profit -104 -1,826 -559 536 1,820
Cash flow from Financing 4,882 (1,645) (453) (2,295) 2,122
Less: Non-Controlling Interests -35 -595 -595 -595 -595
Share of Profits from associates -27 -40 -42 -44 -46 Total Cash Generation 82 1,002 (518) 1,866 5,108
PAT -95 -1,271 -6 1,086 2,368 Opening Cash Balance 314 408 1,411 893 2,759
% growth NA 12.3% -99.5% NA 118.0 Closing Cash & Bank Balance 408 1,411 893 2,759 6,057
EPS (FD) (0.12) -1.61 -0.01 1.4 3.0
Source: Company, Nirmal Bang Institutional Equities Research
% growth NA NA NA NA 118.0
Net DPS - - - - -
Net Payout ratio (%) - - - - -
*Adjusted PAT is after considering non- controlling interest and share in associates Exhibit 20: Key ratios
Source: Company, Nirmal Bang Institutional Equities Research Y/E March FY20 FY21 FY22E FY23E FY24E
Exhibit 19: Balance sheet Profitability and return ratios
Y/E March (Rsmn) FY20 FY21 FY22E FY23E FY24E EBITDA margin (%) 35.6 24.3 38.6 44.3 45.6
Share capital 7,903 7,904 7,904 7,904 7,904 EBIT margin (%) 22.6 -18.4 13.7 25.6 29.9
Reserves and surplus 327 1,272 1,266 2,352 4,720 Net profit margin (%) -1.4 -50.5 -0.1 15.8 26.1
Net worth 8,230 9,176 9,170 10,256 12,625
RoE(%) -1.2 -13.9 -0.1 10.6 18.8
Loans 15,547 16,850 18,350 19,550 22,750
Lease Liabilities 4,627 4,680 4,580 3,000 3,000 RoCE (%) 4.2 -1.3 1.5 4.5 6.1
Minority Interest 7,218 6,174 6,174 6,174 6,174 Working capital and liquidity ratios
Provisions 24 29 31 32 34
Deferred Tax Liability - - - - - Receivables (days) 28 45 45 45 45
Other Non- Current Liability - - - - -
Inventory (days) 21 47 28 21 16
Total capital employed 35,646 36,908 38,304 39,012 44,582
Property, Plant & Equipment 29,631 29,295 31,407 30,516 33,089 Payables (days) 56 239 150 150 150
Right to use 3,387 5,060 4,920 4,780 4,640 Current ratio (x) 0.8 1.9 1.3 2.1 3.1
Investments 96 46 48 49 51 Valuation ratios
Loans and Advances 12 9 9 9 10 EV/sales (x) 8.2 21.5 13.0 8.1 6.1
Other Non-Current Assets 2,909 1,435 1,460 1,486 1,513
EV/EBITDA (x) 23.0 88.2 33.6 18.2 13.4
Total Non-Current Assets 36,035 35,846 37,845 36,841 39,303
Trade Payables 420 788 1,088 1,572 2,029 P/E (x) NA NA NA 29.8 13.7
Other current liabilities 1,519 404 416 428 441 P/BV (x) 3.9 3.5 3.5 3.2 2.6
Provisions (Current) 43 49 50 52 53 Source: Company, Nirmal Bang Institutional Equities Research
Total Current Liabiities 1,982 1,240 1,554 2,051 2,523
Inventories 82 72 67 82 83
Investments 44 9 9 10 10
Trade receivables 503 308 527 840 1,104
Cash and Bank Balance 408 1,411 893 2,759 6,057
Loans and Advances - - - - -
Other Current Assets 555 501 516 532 548
Total Current Assets 1,592 2,302 2,013 4,223 7,803
Net Current Assets -390 1,063 459 2,171 5,279
Total Capital Employed 35,646 36,909 38,304 39,012 44,582
Source: Company, Nirmal Bang Institutional Equities Research

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 In s titu tio n a l E q u itie s

Financial statement EIH Ltd

Exhibit 21: Income statement Exhibit 22: Cash flow
Y/E March (Rsmn) FY20 FY21 FY22E FY23E FY24E Y/E March (Rsmn) FY20 FY21 FY22E FY23E FY24E
Net sales 15,963 4,971 8,628 19,395 20,201 Adjusted Profit after tax 1,653 (3,146) (452) 3,105 3,408
Growth YoY (%) (11.8) (68.9) 73.6 124.8 4.2
Depreciation 1,465 1,327 1,753 1,869 1,903
Operating costs 10,961 7,006 6,594 11,454 11,753
Finance costs 556 457 670 274 274
Other expenses 2,099 883 1,078 2,424 2,525
EBITDA 2,903 -2,919 956 5,516 5,923 Other income (740) (579) (863) (776) (808)
EBITDA growth (%) (28.5) (200.6) 132.7 477.3 7.4 Others (5) (25) - - -
EBITDA margin (%) 18.2 (58.7) 11.1 28.4 29.3 Working capital changes (47) 1,028 (594) (731) (343)
Depreciation 1,465 1,327 1,753 1,869 1,903 Operating cash flow 2,882 (938) 514 3,741 4,433
EBIT 1,438 -4,245 -797 3,647 4,020 Capital expenditure (1,389) (203) (458) (2,422) (708)
EBIT (%) 9.0 -85.4 -9.2 18.8 19.9
Net cash after capex 1,492 (1,140) 56 1,319 3,725
Interest expense 556 457 670 274 274
Cash Flow from Investments 699 633 (467) (2,422) (708)
Other income 784 579 863 776 808
Issue/(buyback of equity) - 3,376 - - -
Exceptional Items (5) (25) - - -
Earnings before tax 1,662 (4,149) (604) 4,149 4,554 Proceeds/repayment of borrowings (1,103) (2,807) 2,490 (4,393) 1,111
Tax- total 9 (1,003) (152) 1,044 1,146 Finance costs (556) (457) (670) (274) (274)
Rate of tax (%) 0.5 24.2 25.2 25.2 25.2 Others (2,153) (124) (1,132) 2,649 (136)
Net profit 1,653 (3,146) (452) 3,105 3,408 Cash flow from financing (3,812) (12) 688 (2,018) 701
Add: Share Of Net Profit Of Associates (1) (608) (45) 311 341 Total cash generation (231) (316) 735 (699) 4,427
And
Less:Joint Ventures
Minority Interest (163) 57 50 (342) (375)
Opening cash balance 1,616 1,385 1,068 1,803 1,104
Adjusted Net Profit 1,488 (3,697) (448) 3,074 3,374
Closing cash & bank balance 1,385 1,069 1,803 1,104 5,531
% growth 13.1 (348.4) 87.9 786.9 9.8
EPS (FD) 2.60 (5.91) (0.72) 4.92 5.39 Source: Company, Nirmal Bang Institutional Equities Research
% growth 13.1 (327.1) 87.9 786.9 9.8
Source: Company, Nirmal Bang Institutional Equities Research
Exhibit 24: Key ratios
Y/E March FY20 FY21 FY22E FY23E FY24E
Exhibit 23: Balance sheet Profitability and return ratios
Y/E March (Rsmn) FY20 FY21 FY22E FY23E FY24E EBITDA margin (%) 18.2 (58.7) 11.1 28.4 29.3
Equity Share capital 1,143 1,251 1,251 1,251 1,251 EBIT margin (%) 9.0 -85.4 -9.2 18.8 19.9
Reserves and surplus 30,222 29,794 28,596 30,920 33,543
Net profit margin (%) 9.3 (74.4) (5.2) 15.8 16.7
Net worth 31,365 31,045 29,847 32,170 34,794
RoE (%) 4.7 (11.9) (1.5) 9.6 9.7
Minority Interest 997 944 894 1,236 1,611
RoCE (%) 4.0 (12.3) (2.2) 10.8 11.0
Loans 4,770 3,412 6,012 1,612 1,612
Provisions 331 294 278 328 309 Working capital & liquidity ratios
Deferred tax liability 1,478 414 435 456 479 Recievable (days) 47.0 57.1 46.0 46.0 46.0
Other Financial Liabilities 2,044 2,049 2,119 2,246 2,411 Inventory (days) 20.3 26.8 29.2 23.9 19.7
Total capital employed 40,985 38,158 39,585 38,049 41,216 Payable (days) 80.2 105.1 100.0 90.0 80.0
Goodwill 3,701 3,609 3,609 3,609 3,609 Current ratio (x) 1.8 1.4 1.9 1.7 3.1
Property, plant and equipment 23,292 22,777 27,023 25,454 23,851
Valuation ratios
Non Current Investments 393 384 393 393 393
EV/sales (x) 4.4 15.1 8.9 3.8 3.6
Investments in Assoc. & Joint Ventures 3,812 3,155 3,155 3,155 3,155
EV/EBITDA (x) 24.2 (25.8) 80.6 13.4 12.1
Deferred tax assets 98 75 75 75 75
Other non-current assets 6,950 6,763 2,607 2,607 2,607 P/E (x) 44.2 NA NA 23.4 21.3
Total non-current assets 38,247 36,764 36,863 35,294 33,691 P/BV (x) 2.1 2.3 2.4 2.2 2.1
Trade payables 2,078 1,791 1,580 2,449 2,213 Source: Company, Nirmal Bang Institutional Equities Research
Other current liabilities 1,265 1,192 1,216 1,240 1,153
Provisions (current) 192 181 166 196 206
Total current liabilities 3,534 3,163 2,962 3,885 3,572
Inventories 610 514 528 751 633
Current Investments 384 572 629 692 762
Trade receivables 2,057 778 1,087 2,444 2,546
Cash and bank balance 1,385 1,068 1,803 1,104 5,531
Other Bank Balances 906 994 994 994 994
Other current assets 930 631 643 654 631
Total current assets 6,273 4,556 5,684 6,640 11,097
Net current assets 2,739 1,393 2,722 2,755 7,525
Total capital employed 40,985 38,158 39,585 38,049 41,216
Source: Company, Nirmal Bang Institutional Equities Research

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 In s titu tio n a l E q u itie s

Rating track
Chalet
Date Rating Market price (Rs) Target price (Rs)
4 June 2019 Buy 345 395
14 August 2019 Buy 329 395
13 November 2019 ACCUMULATE 323 324
11 February 2020 ACCUMULATE 341 324
23 March 2020 BUY 221 273
10 June 2020 ACCUMULATE 155 157
13 August 2020 BUY 135 167
23 September 2020 BUY 142 202
12 November 2020 BUY 142 202
7 January 2021 BUY 186 238
11 February 2021 BUY 170 238
8 April 2021 BUY 150 238
20 May 2021 BUY 170 238
11 August 2021 BUY 161 238
23 September 2021 BUY 200 254

Rating track graph

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EIH
Date Rating Market price (Rs) Target price (Rs)
14 January 2021 Buy 97 116
3 February 2021 Buy 92 116
11 May 2021 Buy 89 108
9 June 2021 Buy 116 140
11 May 2021 Buy 111 140
2 August 2021 Buy 111 140
23 September 2021 Buy 115 156

Rating track graph

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Not Covered Covered

12 Hotel Sector Update

 In s titu tio n a l E q u itie s

Indian hotels
Date Rating Market price (Rs) Target price (Rs)
25 March 2019 Buy 148 195
8 April 2019 Buy 155 195
2 May 2019 Buy 154 195
5 July 2019 Buy 152 206
6 August 2019 Buy 135 206
5 September 2019 Buy 133 168
13 November 2019 Buy 147 171
26 November 2019 Buy 151 174
1 February 2020 Buy 142 174
25 February 2020 Buy 138 174
23 March 2020 Buy 91 127
12 June 2020 Buy 93 107
7 August 2020 Buy 78 91
23 September 2020 Buy 92 116
5 November 2020 Buy 97 116
7 January 2021 Buy 124 164
4 February 2021 Buy 123 164
8 March 2021 Buy 126 164
3 May 2021 Buy 111 164
8 July 2021 Buy 152 192
10 August 2021 Buy 142 192
23 Sept 2021 Buy 173 230

Rating track graph

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13 Hotel Sector Update

 In s titu tio n a l E q u itie s

Lemon tree
Date Rating Market price (Rs) Target price (Rs)
13 July 2018 Buy 76 92
16 August 2018 Buy 78 92
16 November 2018 Buy 72 92
18 February 2019 Buy 72 92
15 March 2019 Buy 84 97
03 June 2019 Buy 74 97
10 July 2019 Accumulate 66 72
8 August 2019 Accumulate 57 64
11 September 2019 Accumulate 53 64
14 November 2019 Accumulate 58 62
26 November 2019 Accumulate 59 60
18 February 2020 Accumulate 60 60
23 March 2020 Buy 31 51
2 June 2020 Buy 19 25
11 August 2020 Buy 24 29
23 September 2020 Acc 27 27
10 November 2020 Acc 28 27
7 January 2021 Buy 43 55
12 February 2021 Buy 42 55
17 June 2021 Accumulate 42 47
13 August 2021 Accumulate 40 44
23 September 2021 Accumulate 41 48

Rating track graph

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14 Hotel Sector Update

 In s titu tio n a l E q u itie s

DISCLOSURES

This Report is published by Nirmal Bang Equities Private Limited (hereinafter referred to as “NBEPL”) for private circulation. NBEPL is a
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to achieve and maintain independence and objectivity in making any recommendations.

15 Hotel Sector Update

 In s titu tio n a l E q u itie s

Disclaimer
Stock Ratings Absolute Returns
BUY > 15%
ACCUMULATE -5% to15%
SELL < -5%
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16 Hotel Sector Update