Concall AI

EIH — Q2 FY25 earnings call

Call held 22 Nov 2024

Management summary

EIH delivered record-breaking Q2 results, driven by strong domestic demand and significant growth in the Trident brand. Management is pivoting toward an aggressive expansion strategy, targeting 50 new hotels by 2030 with a focus on mixed-use developments to enhance IRRs. While international headwinds exist in the MENA region, the company remains highly optimistic about the Indian luxury hospitality cycle.

Highlights

Consolidated Revenue reached ₹623 crore, a 13% YoY growth, marking the best Q2 performance in 15 years.
Consolidated PAT surged 41% YoY to ₹133 crore, with EBITDA growing 26% to ₹208 crore.
RevPAR for all owned hotels grew 15% YoY, consistently maintaining a 130% premium over the STR competition set.
Average Room Rate (ARR) increased to ₹14,970 from ₹13,730 last year, while occupancy improved to 72% from 69%.
Management announced an aggressive pipeline of 20 new properties (hotels and cruises) expected by 2029.
The company reiterated its long-term vision to open 50 hotels by 2030.
Trident Metro segment outperformed with a 22% YoY RevPAR growth, while Oberoi Metro grew 10%.

Key financials

01 Consolidated Revenue ₹623 Cr +13%YoY
02 Consolidated EBITDA ₹208 Cr +26%YoY
03 Consolidated PAT ₹133 Cr +41%YoY
04 Average Room Rate (ARR) ₹14,970 +9%YoY
05 Occupancy 72% +4.3%YoY

What they filed

Q1 FY27: revenue up 15.6%, net profit up 252.8% against the same quarter last year.

₹ Cr · quarterly

Line item	Q2 FY25	Q3 FY25	Q4 FY25	Q1 FY26	Q2 FY26	Q3 FY26	Q4 FY26	Q1 FY27
Revenue	521	695	728	519	530 +2%	779 +12%	809 +11%	600 +16%
Expenses	369	393	422	378	395	455	520	451
EBITDA	152	303	306	141	135 −11%	324 +7%	288 −6%	149 +6%
Margin	29%	44%	42%	27%	25%	42%	36%	25%
Other income	35	25	133	-58	50	2	51	58
Interest	4	4	4	4	4	4	4	4
Depreciation	32	31	30	30	31	34	34	34
Profit before tax	151	292	405	49	150 −1%	288 −1%	301 −26%	170 +247%
Tax rate	24%	25%	18%	26%	31%	31%	33%	25%
Net profit	114	220	332	36	103 −10%	199 −10%	200 −40%	127 +253%
EPS	1.83	3.51	5.31	0.58	1.65	3.17	3.20	2.03

How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

Trident Metro
22% RevPAR Growth
Oberoi Metro
10% RevPAR Growth
Leisure
7% RevPAR Growth

Guidance & targets

Capacity

Total New Properties Capacity · by 2029 · High confidence 20

To share with you the expansion plans, there are 20 properties which are expected to come in by 2029.

— Samidh Das, Corporate Controller
Total New Hotels Capacity · by 2030 · Medium confidence 50

I'd made an earlier statement saying that we would like to open 50 hotels by 2030. We will do everything we can to hold true to that statement.

— Vikram Oberoi, MD & CEO

Debt

Debt Equity Ratio Debt · next 5 years · High confidence 25%

But we do not go over a debt equity ratio of 25%. And with all these projects, that will not be exceeded.

— Vikram Oberoi, MD & CEO

Profitability

Minimum IRR Threshold Profitability · Project Life · High confidence 15%

So minimum threshold, internal rate of return of 15pc or higher and all these projects are significantly above that.

— Vikram Oberoi, MD & CEO

Capex

London Project EIH Exposure Capex · by 2028 · Medium confidence £18 million

So all things given, EIH's exposure will be probably slightly under £18 million. So that covers London.

— Vikram Oberoi, MD & CEO

Risks & concerns

Geopolitical conflict in MENA region
medium

Performance in the MENA region is muted due to the ongoing Israel conflict.

Management acknowledged
Lease expiry of Mumbai Airport Lounge
medium

The lease was supposed to end in Q2; only a one-quarter extension until Q3 has been secured so far.

Analyst acknowledged
Renovation-led capacity constraints
low

Oberoi Grand is temporarily closed for major renovation, and Ranthambore renovations are ongoing until early next year.

Management acknowledged

Areas of evasion (4)

Legal matters regarding PRS Oberoi's will
Political controversy details regarding Tirupati
Specific revenue figures for flight catering
Quantification of potential business loss from airport lounge closure

Q&A highlights

1 direct, 1 evasive

Strategic logic of UK investment vs India opportunities Direct

If we want to look at a growth strategy through management contracts in the UK... today not having a presence in the developed markets, any owner is reluctant to look at opportunities for management contracts with us.

Explains that the London hotel is a loss-leader/flagship intended to unlock high-margin management contract growth in Europe and the US.

Asked by Sumant Kumar

Mumbai Airport business lounge lease status Partial

So we have got a confirmation from Adani that will continue to till the end of Q3... there has been an extension of one quarter.

Reveals a potential risk to a high-traffic revenue stream as the lease is currently only being extended on a quarter-by-quarter basis.

Asked by Amit Agarwal

Legal matters regarding the will of late PRS Oberoi Evasive

I'm not here to comment on that.

Management completely shut down questions regarding family legal disputes that could potentially impact company governance or shareholding.

Asked by Avin Kumar Kantaria

2 min read 5 chapters

Detailed narrative

Record-Breaking Financial Performance

EIH reported its best Q2 performance in 15 years, with consolidated revenue growing 13% YoY to ₹623 crore. Profitability saw even sharper gains, with PAT increasing 41% to ₹133 crore and EBITDA margins expanding significantly. Management attributed this to strong domestic demand and a 15% YoY growth in RevPAR for owned hotels, which continues to trade at a 30% premium to its competitive set.

Aggressive 2030 Expansion Pipeline

The company unveiled a robust pipeline of 20 new properties expected to be operational by 2029, including 13 Oberoi and 4 Trident hotels. This is part of a broader vision to reach 50 hotels by 2030. Management emphasized that 11 of these projects are in India and 9 are international, with a mix of 9 owned and 11 managed properties to balance capital intensity.

Strategic Pivot to Mixed-Use Developments

Management is increasingly favoring mixed-use developments, such as the upcoming projects in Hebbal (Bangalore) and Pune, to maximize IRRs. The Hebbal project will feature an Oberoi (125 keys), a Trident (250 keys), and over 1 million square feet of Grade A commercial space. CEO Vikram Oberoi noted that standalone hotels in Tier 1 cities often yield lower returns due to high land costs, whereas commercial leasing significantly enhances the project's internal rate of return.

International Flagship in London

EIH is investing in a 21-key luxury hotel in Mayfair, London, with a total project cost of £69 million. While the key count is small, the strategic intent is to establish a brand presence in a top-3 source market to facilitate future management contracts in Europe and the US. EIH expects its net equity exposure to be under £18 million after bringing in a 49% partner and utilizing 50% debt.

Operational Resilience and Pricing Power

Despite the closure of Oberoi Grand for renovation and muted performance in the MENA region due to conflict, EIH demonstrated strong pricing power. ARR grew 9% YoY to ₹14,970, and management expects rates to remain strong through the peak winter season (Q3 and Q4). The Trident brand showed particular strength, with Trident Metro RevPAR growing by 22%.

This is an AI-generated summary of a publicly available earnings call transcript.

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