IRCTC, Chalet Hotels to Lemon Tree, Hotel industry Q4 results preview: Strong revenue growth eyed
The hotel industry has been registering a number of positives and in this 4th quarterly results preview, we take a brief look at some of them. On top of the mind is the question, will the high demand lead to strong revenue growth for the just ended financial quarter -March 31, 2024 (Q4FY24)? The industry has seen notable expansions across hotels, luggage, and aviation segments. Also, nationwide average occupancy rates surged from 66-68% in January 2024 to 72-74% in February 2024, LiveMint quoted brokerage Prabhudas Lilladher as saying.
And what is driving Q4 expectations for the hotel industry? Several factors contribute to this optimistic outlook. A robust economy, heightened demand for meetings, incentives, conferences, and events (MICE), a flurry of scheduled events, substantial double-digit growth in foreign tourist arrivals, and a 5% uptick in domestic passenger traffic are some of them.
Despite a 26% surge in new hotel openings to 146, there’s been a simultaneous 10% drop in room additions to 9,833 between April 2023 and February 2024, as per the HVS Anarock report.
Going forward, Elara Capital says acceleration in average room rate (ARR) growth and occupancy, driven by strong leisure and business travel will likely continue.
Within the hospitality sector, Prabhudas Lilladher anticipates double-digit ARR growth for both Chalet and Lemon Tree, with EBITDA margins projected at 46.0% and 49.7%, respectively.
Take a brief look at the expected stats to flow in as per Prabhudas Lilladher (PL):
IRCTC
17.2% YoY growth in top-line is expected to ₹11.3 billion for IRCTC. PL expects ticketing volumes of ~115mn. Internet ticketing revenues are seen at ₹3.2 bn. Overall, it is expected that EBITDA margin will be at 34.2%.
Lemon Tree
Anticipating a 12.8% YoY increase in ARR with a 72% occupancy rate, PL predicts a 26.9% YoY revenue growth for Lemon Tree, with an EBITDA margin of 49.7%.
PL recommendation: Despite a marginal reduction in EPS estimates for FY25E/FY26E, PL maintains a ‘BUY’ rating on the stock.
Target price: ₹153.
Safari Industries
Safari’s top-line is projected to grow by 27.2% YoY to ₹3.9 billion, with expected GM/EBITDA margin of 47.9%/17.5% in Q4FY24E. PAT is forecasted to increase by 9.3% YoY to ₹416 million.
Chalet Hotels
The forecast is for a 16.4% YoY increase in ARR with a 72% occupancy rate. PL expects Chalet Hotels to report a robust 36.6% YoY revenue growth with an EBITDA margin of 46.0%.
PL Recommendation: “We maintain our ‘ACCUMULATE’ rating on Chalet as deleveraging process has begun and demand environment continues to remain robust.”
Target price: Revised to ₹888 from ₹820.
VIP Industries
A 16.3% YoY growth in top-line to ₹5.2 billion is expected for VIP Industries, with GM/EBITDA margin projected at 54.7%/8.8% in Q4FY24. Adjusted PAT is likely to decline by 73.6% YoY to ₹113 million.
