Hotel Leela Venture’s net sales grew 23.8% to Rs5.15 billion in FY08 as compared to Rs4.16 billion in the previous year.
The growth in revenue was driven by continued buoyancy in the Goa and Mumbai markets, room additions and steady growth in F&B business across the key markets.
The overall ARR growth during the year was 8%. The ARR growth in Mumbai, Goa and Kovalam properties was 24%, 20% and 18%, respectively. However, ARR for the Bangalore property dipped 12% due economic slowdown and increased supply.
For Q4FY08, net sales grew by 32.5% to Rs1.55 billion as compared to Rs1.17 billion in Q3FY07. Net profit during the quarter however, declined 34% mainly due to significant increase in operating expenses, tax and depreciation.
For FY08, the hotel has posted EPS of Rs3.9 which is inline with our full year estimates. Going forward, we expect fully diluted EPS of Rs3.5 each in FY09 and FY10, respectively.
We reduce our target price to Rs70 from Rs84 earlier mainly due to FCCB price reset which has increased fully diluted equity. We maintain BUY.