Stock PitchEIH Limited

-Aditya Goyal, BITS Pilani

Company Outlook

• Promoter Group – Oberoi• Sector – Hotel and Restaurants• Incorporation Year – 1949• Chairman – P R S Oberoi• BSE Code – 500840• NSE Code- EIHOTEL

2

Shareholding Pattern

4%14%

37%

35%

11%

% of Shares

Foreign Institutions Non Promoter Corp. Hold. Promoters

Public & Others

Promoters and Major Investors• Oberoi Group ( 30 % )• ITC Limited ( 15 %)• Reliance Industries

(18%)

3

Major Competitors/Peers

Taj Group of Hotels – Promoted by Tata Group-Trades as Indian Hotels Co. Ltd.

Indian Tourism Development Corporation (ITDC)-Govt. Promoted and Fueled Chain

Hotel Leela –Trades as Leela SubsidiariesClub Mahindra- Trades as Mahindra Hotels and

Resorts Ltd.4

EIL Limited

ITDC LTD

Indian Hotels Co Ltd

Hotel Leela Ventures

Mahindra Hotels &Resorts

6032.71

1981

10402

851

3551

0

0

0

0

0

0

0

0

Market Capitalisation of major players (in crores)

5

2011 2012 2013 2014 2015

-350

-300

-250

-200

-150

-100

-50

0

50

100

150

12.77

89.68

-58.3

86.5

16.7-7.74 2.9

-290

-113

86

-12.81.83 2.24 -11.6 -16.4

PAT %growthEIH LTD. IHCL Mahindra

6

2011 2012 2013 2014 20150

5

10

15

20

25

30

Operating profit margin %EIL Ltd. IHCL Mahindra

7

2011 2012 2013 2014 20150

0.5

1

1.5

2

2.5

3

1.070.86

0.43 0.41 0.450.58

0.31 0.39 0.4 0.48

2.53

1.91

2.2

2.612.47

1.08

2.051.89 1.81 1.82

Current RatioEIL Ltd. Indian Hotels Co ltd Mahindra Industry Av.

8

2011 2012 2013 2014 20150

0.5

1

1.5

2

2.5

3

3.5

4

4.5

Quick ratioEIH Ltd. IHCL Mahindra

9

2011 2012 2013 2014 20150

2

4

6

8

10

12

8.96

7.07

5.47

6.71 6.756.595.86

4.94

0 0

11.07

9.65 9.41

7.26

6.095.86

4.4

3.39

0

3.76

Return on capital employed(%)EIL Ltd. IHCL Mahindra Industry Av

10

2011 2012 2013 2014 20150

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

0.59

0.230.14 0.14 0.1

0.850.76 0.78

0.87

1.11

0.87

0 0 0

11.09 1.12

1.2

1.38

1.2

Debt/equityEIH Ltd. IHCL Mahindra Industry Av

11

2011 2012 2013 2014 20150

5

10

15

20

25

Return on equityEIH Ltd IHCL Mahindra

12

2011 2012 2013 2014 20150

10

20

30

40

50

60

70

80

9080.8

43.23

71.28

47

69.58

49.53

36.49

0 0 0

30.3625.52

21.36 23.12

31.5

P/E RatioEIH Ltd IHCL Mahindra

13

2011 2012 2013 2014 2015

-2

-1

0

1

2

3

4

5

6

7

1.63

3.853.35

4.56

5.94

2.39 2.553.12 3.2

3.58

0 0

-1.3

3.02

1.941.95

1.20.88 0.82

4.19

Interest Coverage ratioEIH Ltd IHCL Mahindra Industry Av

14

SWOT ANALYSISStrengths• Low Debt to Equity Ratio• Weaker Rupees leading to

Greater Foreign Tourist Occupancy Rate

• Heavy investment in subsidiary arms ensures stability of stocks maintained through mergers.

Weaknesses• Reducing Profit Margins• Closure of Oberoi Delhi for

renovation• Poor Current Ratio• Poor PE Ratio• Weaker Brand Image than

competitors.15

Opportunities• Merger of arms like In –

Flight Kitchen Services, and other Resorts currently operated through EIH Associated Limited

• Exploitation of the 5 year tax holiday announced on resorts near UNESCO sites.

Threats• High Competition and

erosion of market share due to entry of high brand image foreign competitors like Marriott, Radisson and Meriden

16

Current Scenario

• The BoD recently announced that Oberoi Delhi will be shut for next two years on account of renovation. It is noteworthy that the property accounted for 5-8 % of the Operating Profits.

• Lower Occupancy rate caused by oversupply in luxury segment has plagued the company for last few years

• The company will launch 3 new hotels in Middle East this year, all through Subsidiary Holdings.

17