Company: Indian Hotels Company Ltd.
Industry: Hotels
CMP: Rs. 34.55
PE Ratio: 6.62
Financial Analysis for Indian Hotels:
* Indian Hotels has shown strong revenue growth in the past five years along with consistent improvement in operating margins, net profit margin and gross profit margins. This trend is however expected to slowdown in the near term due to the terrorist attack on Taj,Mumbai which is bound to hamper revenue growth in near term. So one can expect not so strong restuts in the next few quarters for Indian Hotels. The global slowdown will also contribute to the decline in revenue in near term.
* The company has been generating strong operating cash flows in the past five years and at the same time making high capital investments as well. So the overall cash flow position of the company is not bad and investments made in the recent years will translate into strong revenue growth once the global economy bounces back.
* Indian Hotels has high reserves and surplus and a comfortable debt equity ratio.
Business Outlook:
* As mentioned earlier my expectation is that the next few quarters would certainly not be great for the company. But I am personally very optimistic about the industry in the long run and hence would see lower prices as a good long term buying opportunity.
* The long term business prospects in this industry can be measured from the fact that just in 2009-10, Indian Hotels plans to launch 2078 rooms. So even in the midst of a slowdown the expansion plans are big and this will give positive results in the next few years for the company.
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