Mehabe score: 2 G Factor: 2 Piotski Score: 3 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 2 and Piotski score of 3.
Description
EIH is primarily engaged in owning and managing premium luxury hotels and cruisers under the luxury Oberoi, Trident and Maidens brands. The Company is also engaged in flight catering, airport restaurants, project management and corporate air charters.(Source : 202003 Annual Report Page No:124)
Main Points
EIH Ltd is the flagship company of the Oberoi group founded by Late Rai Bahadur M.S. Oberoi. Oberoi group is one of pioneers in the Indian hospitality sector. The group has been in the luxury hospitality business for more than six decades in India and has with time, expanded into international destinations viz. Indonesia, Mauritius, Egypt, -and the UAESite:EIHOTELMain Symbol:EIHOTEL
Stock trades at 118.0, above its 50dma 108.32. It also trades above its 200dma 98.64. The stock remains bullish on techicals
The 52 week high is at 122.80 and the 52week low is at 58.17
Price Chart
P/E Chart
Sales and Margin
Strengths
– has reduced debt.
Weakness
– has low interest coverage ratio.
-The company has delivered a poor sales growth of -21.44% over past five years.
– has a low return on equity of -0.44% for last 3 years.
Competition
– The industry trades at a mean P/E of 79.5x. Indian Hotels Co trades at the industry’s max P/E of 0.0x. EIHOTEL trades at a P/E of x
– Industry’s mean G-Factor is 2.7 while the mean Piotski score is 7.0. EIHOTEL has a G-Factor of 2 and Piotski scoreof 3.
– Average 1 month return for industry is 5.1%. The max 1- month return was given by Mahindra Holiday: a return of 14.53 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 216.0 cr compared to Rs 410.0 cr for period ended Mar 2020, a fall of 47.3%
Company reported negative operating profit of Rs -33.0 cr for period ended Mar 2021. For same period last year, operating profit was 74.0
The EPS for Mar 2021 was Rs -0.78 compared to Rs -0.89 for previous quarter ended Dec 2020 and Rs 0.45 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 497.0 cr for period ended Mar 2021 vis-vis sales of Rs 1596.0 cr for the period ended Mar 2020, a fall of 221.1%. The 3 year sales cagr stood at -32.3%.
Operating margins shrank to -70.0% for period ended Mar 2021 vis-vis 18.0% for period ended Mar 2020, contraction of 8800.0 bps.
Net Profit reported at Rs -370.0 cr for period ended Mar 2021 vis-vis sales of Rs 149.0 cr for the period ended Mar 2020, falling 0%.
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
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 -12.0% compared to -0.0% over the last 3 Years. – The stock has given a return of 81% on a 1 Year basis vis-vis a return of -10% over the last 3 Years. – The compounded sales growth on a TTM bassis is -69% vis-vis a compounded sales growth of -32% over the last 3 Years. – The compounded profit growth on a TTM basis is -339% vis-vis a compounded profit growth of % over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Mar 2021 fii holding stood at 2.83% vis-vis 2.4% for Dec 2020 – Public shareholding has remained largely constant. The Mar 2021 public holding stood at 46.97% vis-vis 47.88% for Dec 2020
Conclusion
– has reduced debt. – has low interest coverage ratio.
-The company has delivered a poor sales growth of -21.44% over past five years.
– has a low return on equity of -0.44% for last 3 years.
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 108.32 and is trading at 118.0 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
