Reviews
In this edition, we have reviewed Indian Hotels Company Limited and Procter and Gamble Hygiene and Healthcare Limited. We suggest our reader-investors to HOLD Indian Hotels Company Limited and Procter andGamble Hygiene and Healthcare Limited.
We had previously recommended Indian Hotels Company Limited (IHCL) in Volume No. 34, Issue No. 09, dated April 1-15, 2019, under the ‘Choice Scrip’ segment. The stock was then trading at Rs150.95 and was recommended based on good growth prospects and higher profitability. IHCL is an Indian hospitality company that manages a portfolio of hotels, resorts, jungle safaris, palaces, spas and in-flight catering services. On a consolidated basis, the net sales for Q1FY21 decreased by 85.92 per cent to Rs143.61 crore from Rs1,020 crore reported for Q1FY20. The company incurred an operating loss of Rs234.26 crore for Q1FY21 as against operating profit of Rs210.50 crore gained in Q1FY20. IHCL incurred a net loss of Rs266.93 crore in Q1FY21 compared to net profit of Rs10.12 crore gained in Q1FY20.
Net sales for FY20 decreased by 1.08 per cent to Rs4,463.14 crore from Rs4,512 crore reported for FY19. The company reported an operating profit of Rs1,099.95 crore for FY20, thus expanding by 20.46 per cent as compared to the operating profit of Rs913.11 crore posted for FY19. It gained net profit of Rs350.77 crore in FY20, which is an expansion by 43.41 per cent compared to the net profit of Rs244.59 crore gained in FY19. The company reported impressive results for FY20. However, its quarterly performance was impacted due to the nationwide lockdown. Now as lockdown and travel restrictions have been eased in many states, this will drive demand.
Under R.E.S.E.T 2020, the company is planning to maximise revenue potential through initiatives like online F&B business, zero tough digital transformation and rationalisation of fixed overheads. Because of the company’s strong parentage and brand visibility along with meaningful cost optimisation measures initiated during the first quarter, it is expected to perform well in future. Hence, we recommend HOLD .
We had previously recommended Procter and Gamble Hygiene and Healthcare Limited in Volume No. 34, Issue No. 22, dated September 30– October 14, 2019, in the ‘Cover Story’. The stock was then trading at Rs11,780.90 and was recommended based on the company’s sturdy growth momentum across segments, better performance than peers and strong product profile. PGHH is engaged in the manufacturing and selling of branded packaged FMCG products in the feminine care and healthcare businesses.
Looking at the quarterly trends, on a standalone basis the net sales for Q1FY21 decreased by 0.49 per cent to Rs634.53 crore from Rs637.64 crore reported for Q1FY20. The company reported operating profit of Rs119.86 crore for Q1FY21, thus expanding by 60.89 per cent as compared to the operating profit of Rs74.50 crore posted for Q1FY20.
It gained net profit of Rs69.21 crore in Q1FY21, increasing by 13.85 per cent from the net profit ofRs60.79 crore gained in Q1FY20. Net sales for FY20 increased by 1.87 per cent toRs3,001.99 crore from Rs2,946.85 crore reported for FY19. For Q1FY20, the company posted operating profit of Rs647.82 crore, thus declining by 2.23 per cent when compared to the operating profit of Rs662.59 crore posted for FY19.
It gained net profit of Rs433..08 crore in FY20, compared to net profit of Rs419.13 crore gained in FY19. PGHH is focusing on improving the productivity and superiority of its products. The company has positive potential for growth in the feminine hygiene segment which will aid in expanding its market reach. Hence, we recommend HOLD.
(Closing price as of October 06, 2020)