Royal Orchid Hotels Limited — Investor Meet, 22-11-2024: Analysts/Institutional Investor Meet/Con. Call Updates

1. Financial Performance: For Q2 FY25, Royal Orchid Hotels reported standalone income of ₹51.94 crore, up 14% from ₹45.50 crore in the previous year. Standalone EBITDA increased by the same margin, reaching ₹16.02 crore, while standalone PAT before exceptional items surged 26% to ₹6.2 crore. Consolidated income rose 12% to ₹78.32 crore, but consolidated EBITDA showed marginal growth of 2%, at ₹19.36 crore. The consolidated PAT remained flat at ₹7.26 crore year-over-year. The company’s EPS improved to ₹2.73 from ₹2.49.

2. Future Outlook and Growth Drivers: Management remains optimistic about margin improvements in upcoming quarters, driven by ongoing hotel refurbishments and the upcoming hotel opening in Mumbai. The company is also diversifying its product offerings and enhancing customer experiences.

3. Order Book and Operational Updates: Royal Orchid has added two new hotels with 91 keys in Q2 and is progressing on a 300-room hotel in Mumbai, expected to commence operations by March next year. They aim to leverage revenue share models and management contracts for future hotel developments.

4. Analyst Q&A Insights (Detailed):

- Revenue and Profitability: Analysts queried the flat PAT despite revenue growth. Management noted the impact of accounting adjustments and increased operational costs as key factors.

- Market Position and Competitive Landscape: Questions addressed changes in market strategy, particularly in elevating rates from a volume-led approach. Management confirmed ongoing renovations are intended to enhance market positioning.

- Operational Challenges or Risks: The management acknowledged weather disruptions affecting occupancy rates but expressed confidence in recovering demand.

- Capex and Capital Allocation: Responses indicated a cautious approach to Capex with a focus on internal funding. Future expansions are expected without overheating the financials.

- Strategic Priorities and Long-Term Vision: Management reiterated their commitment to a robust growth strategy, managing costs, and enhancing brand loyalty through their new loyalty program.

5. Market or Regulatory Updates: Management addressed a SEBI inquiry, noting that allegations against promoters have been cleared, with an ongoing appeal regarding accounting practices.

6. Strategic Focus Areas: The company is emphasizing innovation, asset refurbishment, and customer loyalty strategies, indicating a focused approach to resilience and growth in a competitive market.

7. Investor Insight: The combination of improved financial performance, strategic asset expansion, and a reinvigorated focus on customer loyalty suggests a positive long-term trajectory. This positions the stock towards a potential buy, given the anticipated future growth and operational improvements.