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MOSL: Morning India (20/February/19): 1. Indian Hotels (On track to turn ‘Aspiration 2022’ into reality); 2. Automobiles (M&HCVs: Higher tonnage trucks back on the recovery path?); 3. Utilities; 4. Healthcare

MOrning India (20/February/19): 1. Indian Hotels (On track to turn ‘Aspiration 2022’ into reality); 2. Automobiles (M&HCVs: Higher tonnage trucks back on the recovery path?); 3. Utilities; 4. Healthcare

 

Today’s top research idea

Indian Hotels: On track to turn ‘Aspiration 2022’ into reality; Industry dynamics favorable

• Indian Hotels (IH) remains confident about achieving its ‘Aspiration 2022’ goal of being an iconic and profitable hospitality company.
• The company targets EBITDA margin expansion of 800bp to 25%, led by (a) industry tailwinds (IH’s ARR increased 8% in FIT segment; took ARR hike of 8.5% in corporate segment in Jan’19) and (b) cost reduction (by 3-5%).
• IH relaunched Ginger Goa hotel in Dec’18, following which ARR has increased by 30-40% and EBITDA margin is likely to improve as costs have not increased proportionally. In FY20, the company plans to rebrand 14 Ginger hotels. The company also plans to open 400-room Ginger hotel on its existing land in Mumbai with a capex of INR2b. At the Connaught Hotel, it plans to increase rooms to 104 from 85 now.

Piping hot news

TN: BJP, AIADMK, PMK seal LS poll pact

• A day after sealing its pre-poll deal with the Shiv Sena in Maharashtra, the BJP on Tuesday concluded a deal with the ruling AIADMK in Tamil Nadu for the upcoming Lok Sabha elections. While the BJP has been allotted five Lok Sabha seats, the Pattali Makkal Katchi (PMK) has been given seven seats in Lok Sabha and one in Rajya Sabha. Talks are on with another regional party, the DMDK, and its outcome will decide the number of seats that the AIADMK will contest. For now, it has 27 seats at its disposal.