Royal Orchid Hotels LtdQ1 FY24
Royal Orchid Hotels Ltd Q1 FY24 Earnings Call Analysis
Revenue, margin, capex, fundraise and order book outlook from management commentary.
Price: ₹343P/E: 23.9Market Cap: ₹892 CrSector: Leisure Services
Management growth scorecard
Revenue
Category 3
Margin
Category 3
Fundraise
Yes
Order
N/A
Capex
Yes
2 of 4 growth signals are positive.
Full analysisRevenue guidance
Category 3- →Royal Orchid Hotels Ltd expects meaningful top-line growth in coming quarters as new properties open, especially with 150 properties under management, revenue share, or ownership in the next two years.
- →Mumbai hotel is expected to generate ₹100-120 crores top-line at steady state (FY25-26), significantly boosting revenue.
- →Surat managed property (288 rooms) will progressively contribute fees as rooms come online over 12 months, improving bottom line with minimal cost impact.
- →Overall revenue growth for FY25 is projected around ₹370-380 crores with a 4-5% ARR growth.
- →Post-election corporate demand is likely to revive from Q2 onwards, enhancing revenues.
- →Expansion through revenue share and management contracts drives resilient fee-based income, supporting stable growth even during downturns.
- →New brand launches (5-star and smart budget) targeting different segments are expected to facilitate market expansion and revenue diversification.
Margin guidance
Category 3- →The company expects a roughly 15% growth in Profit Before Tax (PBT) in FY25, heavily dependent on the Mumbai hotel's opening (targeted for January).
- →Top-line growth for FY25 is projected around ₹370-₹380 crores.
- →EBITDA growth is expected in the range of ₹10-₹15 crores for FY25.
- →Refurbishment expenses of ₹2-3 crores are expected in FY25, considered as investment for future growth.
- →Fee-based income from managed hotels offers resilience and steady earnings, with new properties and revenue-share hotels adding to top line.
- →Long-term growth driven by increasing number of managed and revenue-share hotels (150 properties targeted in next two years).
- →EPS remains strong with consolidation of new hotels; PAT increased by 3% in FY24 and is expected to improve further.
- →Focus on return on capital employed (ROCE) remains high at 20%, one of the best in the industry.
3 more insights locked — sign up free to unlock
Fundraise plans
Yes- →The company currently has access to ample debt funding, with interest rates having declined from 16% to 9%, and banks actively approaching them for loans.
- →Royal Orchid Hotels Ltd is judiciously using available debt to grow through a revenue share model rather than aggressively taking on new asset ownership.
- →There is no explicit mention of planned new equity fundraising in the call.
- →The focus remains on capital deployment for existing projects, such as the Mumbai hotel and refurbishments in Goa and Bangalore.
- →Growth strategy emphasizes management contracts and revenue share assets to enhance return on capital and EBITDA, minimizing the need for large additional capital raises.
- →Any future fundraising would likely be aligned with sustaining growth without undue risk, but no concrete plans for new debt or equity rounds were disclosed in this call.
Order book
- →Royal Orchid Hotels Ltd has been actively adding hotels, with 1,170 keys added since April 2023.
- →In Q4 FY24 alone, they added 3 hotels with 131 keys.
- →The company has a significant pipeline, including a large 288-room managed property in Surat, currently one-third operational, expected to be fully operational in 12 months.
- →The new Mumbai hotel with 300 rooms is expected to open by the end of the calendar year and is projected to generate ₹100-120 crores in top-line revenue at steady state.
- →Growth in management contracts has been aggressive, doubling the number of hotels post-COVID, with more pipeline announced.
- →Future income from new contracts is linked to revenue growth, implying orderbook revenue will increase with Average Room Rate (ARR) improvements.
- →Other banqueting-focused initiatives for 20 hotels indicate ongoing expansion in services.
Capex plans
Yes- →Goa CapEx may be delayed due to pending plan sanction; work will start once sanctioned, likely after peak season (Nov-Jan).
- →Bangalore hotel CapEx includes addition of 28 rooms expected by March 2025; this will be capitalized and not hit P&L.
- →Refurbishment (₹2-3 crores) ongoing for various hotels, including Bangalore, mainly maintenance/upgrades, not heavy CapEx, spread over the year.
- →Mumbai hotel development (approx. 300 rooms) is a major ongoing project with expected revenue from FY 2025-26; involves significant capital and operational ramp-up.
- →Investment focus favors high return on capital employed properties; growth via management/revenue share models preferred over owning assets.
- →Launch of new hotel brands planned, including a 5-star brand to be introduced with Mumbai hotel and a "smart" tech-savvy hotel brand targeting millennials, possibly tested in Gurgaon.
- →Overall, strategic investment emphasizes asset-light model with selective capex on owned/high-return properties and brand expansion.
How does Royal Orchid Hotels Ltd rank vs peers in Leisure Services?
Pro feature1Royal Orchid Hotels Ltd
Rev 3Mar 3
See full Leisure Services sector rankings
Want more stocks like Royal Orchid Hotels Ltd?
Build an AI portfolio filtered by sector, market cap, and growth rank. Takes 2 minutes.
Build my portfolio