About the Company
The Most Fancied stock of hospitality sector is facing tough times because of the slowdown in economy.The rising costs and the way people have cut down on their spending would get reflected to a large extent on the hospitality industry. With most of the companies going on an austerity drive and cutting costs, hotels are the biggest sufferers. The cut down by corporate clients becomes first evident in the financial performance of the hotels.
About the Financials
The Company has posted results for the second quarter for the current fiscal ended 30th September 2008.If the performance was flat in Q1, it has fallen in Q2.Net sales rose on YoY by a meager 9.35% but the burgeoning costs, which rose 46%; depreciation which was up 37% and MTM forex loss of Rs.9.30 crore, all took its toll. PAT fell by 40% at Rs.24.05%. The fall in the margins has been sharper. OPM fell from 64.82% to 44.23% and NPM fell from 40.06% to 21.96%.
Plans Of Expansion
Its new hotel at Udaipur is scheduled to open in current Q3. And the one in Gurgaon, is to open by end of October or early November. Its hotel in Chennai is expected to open by September 2009.
About The Counter
The time ahead remain bad for hospitality sector. The current fiscal is expected to remain tough and even being able to maintain these levels could become a task. It is advised to stay away from the counter as we do not find good return in this sector in short to medium term prospective.
Disclaimer: I do not have any personal holding in this stock.