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Oriental Hotels CAPEX dropped on 41.3% in 2015 while Revenue increased on 3.1%

15-05-2015 • About Oriental Hotels ($ORIENTHOT) • By InTwits

Oriental Hotels reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
  • Oriental Hotels has high CAPEX intensity: 5 year average CAPEX/Revenue was 18.9%. At the same time it's a lot of higher than industry average of 12.5%.
  • CAPEX is quite volatile: 274 in FY2015, 467 in FY2014, 612 in FY2013, 772 in FY2012, 876 in FY2011
  • The company has potentially unprofitable business model: ROIC is at 3.8%
  • It operates with medium-size leverage: Net Debt/EBITDA is 5.5x while industry average is 4.7x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.

Oriental Hotels ($ORIENTHOT) key annual financial indicators

mln. INR201120122013201420152015/2014
P&L
Revenue2,7613,1723,4463,5543,6643.1%
EBITDA69868963955161010.7%
Net Income292225156-22616
Balance Sheet
Cash132267191172121-29.8%
Short Term Debt5745741,0391,711876-48.8%
Long Term Debt1,9032,6462,0661,7622,60647.9%
Cash flow
Capex876772612467274-41.3%
Ratios
Revenue growth-36.9%14.9%8.6%3.1%3.1%
EBITDA growth19.6%-1.3%-7.3%-13.7%10.7%
EBITDA Margin25.3%21.7%18.5%15.5%16.7%1.1%
Net Income Margin10.6%7.1%4.5%-6.4%0.4%6.8%
CAPEX, % of revenue31.7%24.3%17.7%13.1%7.5%-5.7%
ROIC8.1%6.4%4.3%2.7%3.8%1.1%
ROE8.2%5.9%3.9%-5.7%0.4%6.2%
Net Debt/EBITDA3.4x4.3x4.6x6.0x5.5x-0.5x

Revenue and profitability


The company's Revenue increased on 3.1% in FY2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin jumped on 39.8 pp from -76.1% to -36.3% in FY2015.

Net Income marign increased on 6.8 pp from -6.4% to 0.45% in FY2015.

Capital expenditures (CAPEX) and working capital investments


The company's CAPEX/Revenue was 7.5% in FY2015. The company's CAPEX/Revenue dropped on 16.8 pp from 24.3% in FY2012 to 7.5% in FY2015. For the last three years the average CAPEX/Revenue was 12.8%.

Return on investment


The company operates at low ROIC (3.77%) and ROE (0.45%). ROIC increased slightly on 1.1 pp from 2.7% to 3.8% in FY2015. ROE increased on 6.2 pp from -5.7% to 0.45% in FY2015.

Leverage (Debt)


Debt level is 5.5x Net Debt / EBITDA and 5.7x Debt / EBITDA. Net Debt / EBITDA dropped on 0.5x from 6.0x to 5.5x in FY2015. Debt showed almost no change in FY2015 while cash dropped on 29.8% in FY2015.

Valuation


Oriental Hotels's trades at EV/EBITDA 11.1x and P/E 210.0x while industy averages are 10.5x and 26.1x. Oriental Hotels's EV/(EBITDA-CAPEX) is 20.2x with the industry average at 4.7x.

Appendix 1: Peers in Hotels


Below we provide Oriental Hotels benchmarking against other companies in Hotels industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.

Top companies by Revenue growth, %

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
The Byke Hospitality ($THEBYKE)-83.8%47.6%105.7%54.3%
Sayaji Hotels ($SAYAJIHOTL)26.3%18.2%24.5%29.4%
Sterling Holiday Resorts (India) ($STERLINH)69.9%50.6%21.3%26.2%
Asian Hotels (East) ($AHLEAST)-62.1%3.4%76.9%18.9%
Hotel Leelaventure ($HOTELEELA)-39.6%23.2%12.7%11.4%
 
Median (15 companies)-33.0%15.5%12.7%5.9%61.4%
Oriental Hotels ($ORIENTHOT)14.9%8.6%3.1%3.1%


Top companies by EBITDA margin, %

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Asian Hotels (North) ($ASIANHOTNR)36.6%10.8%22.9%26.9%
Kamat Hotels (India) ($KAMATHOTEL)31.9%29.7%22.1%26.7%
Tgb Banquets And Hotels ($TGBHOTELS)20.0%21.2%23.6%25.0%
Country Club (India) ($COUNCLB)31.8%34.2%32.3%24.2%
Royale Manor Hotels & Industries ($RAYALEMA)24.1%36.3%23.5%23.2%
 
Median (14 companies)25.3%21.9%22.9%21.0%25.9%
Oriental Hotels ($ORIENTHOT)25.3%21.7%18.5%15.5%16.7%


Top companies by CAPEX/Revenue, %

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Country Club (India) ($COUNCLB)53.8%58.7%36.6%49.6%
Asian Hotels (North) ($ASIANHOTNR)60.3%30.8%60.2%37.2%
Sterling Holiday Resorts (India) ($STERLINH)12.2%48.8%50.4%18.7%
Mahindra Holidays & Resorts India ($MHRIL)20.4%26.0%26.5%15.4%
Sayaji Hotels ($SAYAJIHOTL)7.5%18.9%17.5%12.4%
 
Median (12 companies)20.4%30.8%22.0%8.8%4.8%
Oriental Hotels ($ORIENTHOT)31.7%24.3%17.7%13.1%7.5%


Top companies by ROIC, %

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
The Byke Hospitality ($THEBYKE)6.0%5.3%14.5%22.6%
Mahindra Holidays & Resorts India ($MHRIL)20.1%13.4%22.2%16.3%
Sayaji Hotels ($SAYAJIHOTL)10.2%13.1%9.4%14.2%
Fomento Resorts & Hotels ($FOMEHOT)13.6%10.6%13.8%11.7%
Tgb Banquets And Hotels ($TGBHOTELS)7.4%7.1%8.9%8.9%
 
Median (29 companies)7.6%5.4%5.0%4.1%5.8%
Oriental Hotels ($ORIENTHOT)8.1%6.4%4.3%2.7%3.8%


Top companies by Net Debt / EBITDA

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Hotel Leelaventure ($HOTELEELA)23.9x62.5x40.2x33.5x
Asian Hotels (North) ($ASIANHOTNR)9.1x28.4x11.0x15.4x
Kamat Hotels (India) ($KAMATHOTEL)15.0x13.6x17.8x15.1x
Asian Hotels (East) ($AHLEAST)-0.1x-0.0x9.8x8.9x
Country Club (India) ($COUNCLB)1.4x2.0x1.8x3.2x
 
Median (19 companies)1.8x1.8x2.0x0.9x0.0x
Oriental Hotels ($ORIENTHOT)3.4x4.3x4.6x6.0x5.5x


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