Royal Orchid Hotels Ltd Research ReportIdirect Instinct

We had come out with an I-direct Instinct on Royal Orchid Hotel (ROHL) in September, 2017. In a recent development, the hotel industry occupancy has reached an inflection point that may trigger a sharp rise in ARR and EBITDA margin in FY19E. Further, the company expects to clock EBITDA of ~| 50 crore on a consolidated basis in FY19E. Based on this, the stock is available at EV/EBITDA of 14x (vs. industry average of 25x). Hence, we note that despite the recent run up, the company is still available at attractive valuations. On an EV/room basis, the stock is trading at | 1.7 crore/room (below industry average of | 2.5-3.0 crore/room). Given this, we arrive at a target price of | 300-305/share (i.e. EV/adjusted room of | 2.2 crore/room). Triggers