Buy Stocks of Indian Hotels – Result Analysis 3QFY12

This is a stock analysis and recommendation based on results by Indian Hotels in 3QFY12.

Indian Hotels has reported 3QFY12 standalone results which reflect domestic business only. Though revenue beats expectation of stock analysts, margins are lower than expectations.

Revenue for 3QFY12 stands at Rs.530 crore. This is an increment of 9% yoy and 41% qoq. EBITDA is at 28% versus 15% in 2QFY12 and 30% in 2QFY11. Stock market analysts were expecting of EBITDA margin was 32%.

Lower EBITDA margin was due to higher license fees and increased staffing costs. Net debt of the company increased from Rs.3400 crore to Rs.3600 crore in 2QFY12.

Most important development for Indian Hotels would be turnaround of its international business. It contributes almost 33% to it’s total revenues. The turnaround in international business would add to it’s top line and bottom line that should be a good trigger for stock

One may buy stocks of Indian Hotels with target price of Rs.90 to 95 over the time period of one year.

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