Mehabe score: 5 G Factor: 4 Piotski Score: 4 The stock has a rating OBSERVE & HOLD. The mehabe team score is reflective of its fundamental and technical merits. A rating above 8 is considered good buy. The stock has a G-Factor of 4 and Piotski score of 4.
Description
Royal Manor Hotels Limited, incorporated in 1991, operates a 91-room five-star hotel (The Ummed Ahmedabad), which started operations in October 1995, in Ahmedabad. The Unmed Ahmedabad is the first five star hotel in Ahmedabad. The Co. is primarily engaged in the hospitality business.[1] [2] [3]Site:526640Main Symbol:RAYALEMA
Stock trades at 27.8, above its 50dma 26.75. It also trades above its 200dma 20.54. The stock remains bullish on techicals
The 52 week high is at 32.00 and the 52week low is at 10.41
Price Chart
P/E Chart
Sales and Margin
Strengths
– Stock is trading at 1.07 times its book value
Weakness
– Though the company is reporting repeated profits, it is not paying out dividend
– has low interest coverage ratio.
-The company has delivered a poor sales growth of -17.79% over past five years.
– has a low return on equity of 4.17% for last 3 years.
-Earnings include an other income of Rs.1.88 Cr.
-Debtor days have increased from 85.57 to 125.96 days.
Competition
– The industry trades at a mean P/E of 95.7x. Indian Hotels Co trades at the industry’s max P/E of 165.88x. 526640 trades at a P/E of 109.0x
– Industry’s mean G-Factor is 3.6 while the mean Piotski score is 5.0. 526640 has a G-Factor of 4 and Piotski scoreof 4.
– Average 1 month return for industry is 2.3%. The max 1- month return was given by Lemon Tree Hotel: a return of 20.04 %
Quarterly Results
Sales for period ended Sep 2021 is Rs 3.31 cr compared to Rs 1.3 cr for period ended Sep 2020, a rise of 154.6%
Company reported operating profit of Rs 0.66 cr for period ended Sep 2021, operating profit margin at 19.9 %.
Operating profit was negative for the same period last year thus company has improved its margins this year
The EPS for Sep 2021 was Rs 0.17 compared to Rs -0.19 for previous quarter ended Jun 2021 and Rs -0.26 for Sep 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 11.14 cr for period ended TTM vis-vis sales of Rs 7.65 cr for the period ended Mar 2021, a healthy growth of 31.3%. The 3 year sales cagr stood at -21.7%.
Operating margins expanded to 11.4% for period ended TTM vis-vis -1.05% for period ended Mar 2021, expansion of 1245.0 bps.
Net Profit reported at Rs 1.28 cr for period ended TTM vis-vis sales of Rs 0.28 cr for the period ended Mar 2021, rising 78.1%.
Company reported a poor Net Profit CAGR of -27.1% over the last 3 years
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities was positive.
Sales Growth
Profit Growth Statement
Profit Growth Statement
Stock Price CAGR
Return of Equity
General Comments
– The company has worsened on its Return on Equity (RoE) metric. The RoE on Last Year basis was -1.0% compared to 4.0% over the last 3 Years. – The stock has given a return of 132% on a 1 Year basis vis-vis a return of 46% over the last 3 Years. – The compounded sales growth on a TTM bassis is -17% vis-vis a compounded sales growth of -30% over the last 3 Years. – The compounded profit growth on a TTM basis is -57% vis-vis a compounded profit growth of % over the last 3 Years.
Ratios
Shareholding Pattern
– Public shareholding has remained largely constant. The Sep 2021 public holding stood at 54.36% vis-vis 54.36% for Jun 2021
Conclusion
– Stock is trading at 1.07 times its book value – Though the company is reporting repeated profits, it is not paying out dividend
– has low interest coverage ratio.
-The company has delivered a poor sales growth of -17.79% over past five years.
– has a low return on equity of 4.17% for last 3 years.
-Earnings include an other income of Rs.1.88 Cr.
-Debtor days have increased from 85.57 to 125.96 days.
Fundamentally, the stock remains weak on business fundamentals. Weak near term results have dampened and questioned business drivers. We suggest to wait for a upturn in business performance.
Technically, the stock trades above its 50 DMA 26.75 and is trading at 27.8 It has shown near term bullish momentum contrary to business fundamentals. We suggest to observe price action. However as investors, who like to avoid timing the markets, we suggest to avoid the stock
