Indian Hotel PPT

7/24/2019 Indian Hotel PPT

1/27

IndianHotelsCompany

Recommendation:STRONGBUY

CurrentPrice:

59.65

Targetprice: 81

Analyst:NehaMajithia

[email protected]

+03330512176


2/27

- 2 -

MicrosecRese25th

June,2012

InvestmentRationale

Valuation

IndianHotelsCompanyLimited

STRONGBUY SectorHotels

Highcapacityofexpansion inhotel andRooms:IHCLcameupwithtotal27hotelsand3042roomsinla

years,bothinitsdomesticandinternationalportfolio.Itcameupwith7hotelsand971roomsinFY12.Therea

hotelsand2040roomsinpipelineinFY13and20hotelsand2573roomsinFY14.Thecompanyisplanningtod

itshotelsunderitsbrandnamedVivantabyTajto50fromthecurrent23hotelsinthenext4years.Itisalso

toadd

another

22

hotels

under

the

brand

named

Gateway

and

new

55

hotels

under

Ginger

in

next

four

years

Companysfocus on Cash Flows: The company is on verge of improving its Cash flows by focusing on in

expenses,employeecosts,totaldebtandcashbalances.IthasstrongaveragecashearningspershareofINR3.4

share for last fiveyearsand ispoisedtoachievethehistorical levelbygivinganext5yearaverageof~INR5.4

share.

Riseinoccupancyrates,roomtariffsandARRstodrivetoplinegrowth:Thegradualriseinoccupancy

hotel tariffs and average room rates (ARRs) is likely to drive the topline growth and also increase the margin

companyexpectstheoccupancyratestoreach~78%withimproveddomestictourismandweakrupee.Thema

hikesin

hotel

tariff

would

benefit

the

ARRs

and

turnover

of

IHCL

in

coming

years.

There

was

amarginal

rise

in

tariffsof2%inFY12inIndiaand4%globally.

StrongentrybarrierinLuxurysegment:ThecompanyisexpectedtooutperformintheLuxurysegmentspa

accountofstrongentrybarrierinitsLuxurysegment.Thereasonisescalatinglandprices,highestablishingcosts

currentscenario asacorefactorfortheupcominghotels.

We rate Indian Hotels Company Ltd a STRONG BUY. Indian HotelsCompany Limited (IHCL)and its subsi

collectively known as Taj Hotels Resorts and Palaces is one of Asia's largest and finest hotel company, w

inventory of 13629 rooms and 115 hotels across India and internationally. It has presence across different

segments

like

Luxury,

Upper

Upscale,

upper

scale

and

Budget

segment

with

various

brands

named

Taj,

V

Gateway and Ginger Hotels. With its active capacity addition in rooms and hotels, solid entry barriers in

segment, improvedoccupancyrates,amplifyinghoteltariffsandfocusonboostingupthecash flows,wesee

HotelsCompanytogrowataCAGRof10.28%intermsofrevenueandmarginsimprovingsubstantiallyby~160b

thenextfiveyears.


3/27

- 3 -

MicrosecRese25th

June,2012

Companyprofile

Indianhotels

company

(IHCL)

jointly

with

its

subsidiaries

is

known

as

Taj

Hotels

Resorts

and

Palaces,

which

is

one

of

Asias

largest

and

finest

hotel

company. Itgot incorporated in1902,bythefounderoftheTatagroup,Mr. JamshedjiNTata,and itopened itsfirsthotelTheTajMahalPalace&

TowerinMumbai.

Taj Hotels Resortsand Palacescomprises93hotels in 55 locations across India with anadditional 16 international hotels intheMaldives,Malaysia,

Australia,UK,USA,Bhutan,SriLanka,AfricaandtheMiddleEast.

IHCLoperates itsportfolioofhotelsunder4 clearandwelldefinedbrands,namelyTajLuxuryHotels,VivantabyTaj,theGatewayhoteland Ginger

hotels,eachaddressingopportunitiesatvaryingpricepointsandprovidingtoguestswelldefinedandconsistentproducts,servicesandexperiences.

CompanyStructure

IndianHotelsCompanyLtd

Subsidiaries Associates JointVentures

Domestic:

TIFCOHoldingsLimited

KTCHotelsLimited

UnitedHotelsLimited

TajSATS

Air

Catering

Limited

RootsCorporationLimited

ResidencyFoodsandBeveragesLimited

International:

InternationalHotelManagementServices

Inc.

TajInternationalHotels(HK)Limited

St.JamesCourtHotelLimited

ChieftainCorporationNV

IHOCOBV

TajInternationalHotelsLimited

SamsaraPropertiesLimited

IHMS(Australia)

Pty

Limited

ApexHotelManagementServicesPte

Limited

Domestic:

TajMadrasFlightKitchenPvt.Ltd.

TajKarnatakaHotels&ResortsLtd.

TajKeralaHotels&ResortsLtd.

Taj

GVK

Hotels

&

Resorts

Limited

TajSafarisLtd.

KaveriRetreats&ResortsLimited

International:

TALHotelsandResortsLimited

IHMSHotels(SA)(Proprietary)Limited

Domestic:

TaidaTradingandIndustriesLimited

OrientalHotelsLimited

TajMaduraiLimited

Taj

Air

Limited

LandsEndPropertiesPrivateLimited

Luthria&LalchandaniHotel&PropertiesPvt.Ltd.

SkydeckPropertiesandDevelopersPrivate

Limited

SheenaInvestmentsPrivateLimited

ELELHotels&InvestmentsLimited

BusinessJets(India)Pvt.Ltd.

PrestigeGardenResortsPrivateLimited

International:

TALLankaHotelsPLC

LankaIslandResortsLimited

BjetsPte

Limited

BAHC1PteLimited

BAHC2PteLimited

CullenOakesCorp

BusinessJetsPteLimited

BjetsAssetHoldingsPteLimited

PlatinumLeasingLimited

OHLInternational(HK)Limited

TALMaldivesResortsPvtLimited

GoodhopePalaceHotelsPvt.Ltd.


4/27

- 4 -

MicrosecRese25th

June,2012

CompanyBrands


5/27

- 5 -

MicrosecRese25th

June,2012

IndianHotelsCompanyLtd

TAJLuxuryHotels VivantabyTAJ GatewayHotels GingerHotels

India

TheTajMahalPalace,Mumbai VivantabyTaj Connemara,Chennai TGH ResidencyRoad,Bangalore Bangalore

TajLandsEnd,Mumbai TajExotica,Goa TGH BeachRoad,Calicut Haridwar

TheTajMahalHotel,NewDelhi VivantabyTaj FortAguada,Goa HotelChandela,Khajuraho Bhubaneswar

TajPalaceHotel,NewDelhi VivantabyTaj HolidayVillage,Goa HotelSavoy,Ooty Mysore

TajBengal,Kolkata UshaKiranPalace,Gwalior TGH Rawalkot,Jaisalmer Trivandrum

TheTajWestEnd,Bangalore VivantabyTaj HariMahal,Jodhpur Kuteeram,Bangalore Pune Pimpri

TajLakePalaceHotel,Udaipur JaiMahalPalace,Jaipur TGH GirForest,SasanGir Nashik

TajWellingtonMews,Mumbai VivantabyTaj WhitefieldITPL,Bangalore TGH BeachRoad,Vishakapatnam Agartala

TajFalaknumaPalace,Hyderabad TajResidency,Aurangabad TGH PasumalaiHills,Madurai Puducherry

TajCoromandel,Chennai VivantabyTaj President,Mumbai TGH ChurchRoad,Coonoor Vadodara

TajKrishna,Hyderabad VivantabyTaj MGRoad,Bangalore TGH PortRoad,Mangalore PantNagar

RambaghPalace,Jaipur VivantabyTaj Ambassador,NewDelhi TGH FatehabadRoad,Agra RailYatriNiwas,Delhi

UmaidBhawanPalace,Jodhpur TajBanjara,Hyderabad TGH Ambad,Nasik Goa

MahuaKothi,Bandhavgarh TajDeccan,Hyderabad TGH GangesVaranasi Ludhiana

Baghvan,Pench TajChandigarh,Chandigarh TGH Ernakulam Ahmedabad

Pasangarh,Panna VivantabyTaj GomtiNagar,Lucknow TGH Varkala,Janaradhanapuram Mangalore

BanjarTola,Kanha VivantabyTaj BlueDiamond,Pune TGH KMRoad,Chikmagalur Guwahati

VivantabyTaj FishermansCove,Chennai TGH AthwaLines,Surat Jamshedpur

VivantabyTaj Malabar,Cochin TGH M.G.Road,Vijaywada PuneWakad

VivantabyTaj Kumarakom,Kerala TGH UmmedAhmedabad Surat

VivantabyTaj Kovalam,Kerala TGH AkotaGardens,Vadodara Manesar

VivantabyTaj SawaiMadhopur,Ranthambore SMS,Jaipur ChennaiIIT

RamgarhLodge,Jaipur TGHJodhpur DelhiVivekVihar

VivantabyTaj Trivandrum,Kerala NadesarPalace Indore

TajClubHouse,Chennai


6/27

- 6 -

MicrosecRese25th

June,2012

HotelIndustryOverview

VivantabyTaj Panaji,Goa

Overseas AirCatering

ThePierre,NewYork TajSamudra,Colombo AirportGardenHotel,Colombo Mumbai

TajBoston,Boston VivantabyTaj Exotica,Bentota NewDelhi

CamptonPlace,SanFrancisco VivantabyTaj CoralReef,Maldives Kolkata

TajExoticaResort&Spa,Maldives RebakIslandResort,Langkawi,Malaysia Chennai

TajPalaceHotelDubai TajTashi,Thimphu,Bhutan Goa

CrownPlaza/St.JamesCourt,London TajPamodzi,Lusaka Amritsar

51BuckinghamGate,London Bangalore

TajCapeTown,SouthAfrica Cochin

Blue,Sydney,Australia

54%

65%

70%

62%

63%

60%

68%

45%

44%

65%

53%

64%

68%

64%

63%

57%

71%

49%

45%

62%

0% 10% 20% 30% 40% 50% 60% 70% 80%

SouthMumbai

NorthMumbai

Delhi

Bangalore

chennai

Hyderabad

Kolkata

Pune

Jaipur

Goa

Occupancy(%)ofHotelsinIndia

FY20111 2 F Y2 01 011

10085

8728

10638

8189

6536

6097

7349

5919

8154

6496

9407

9025

10442

8327

6521

6143

7108

5470

8407

7007

0 2000 4000 6000 8000 10000 12000

SouthMumbai

NorthMumbai

Delhi

Bangalore

chennai

Hyderabad

Kolkata

Pune

Jaipur

Goa

`/perroom

ARR(%)ofHotelsinIndia

FY201112 F Y201011

Source:MicrosecResearch,CompanyData,STRGlobalSource:MicrosecResearch,CompanyData,STRGlobal


7/27

- 7 -

MicrosecRese25th

June,2012

InternationalTouristArrivals(ITAs)

International Tourists arrivals grew by over 4% in 2011 to INR980

million, attributed by slow global economic recovery, major political

changes in the Middle East and North Africa and natural disasters in

Japan.

The growth of International Tourist arrivals is expected to continue in

2012,butataslowerpaceof34%. ITAsgrewby5.7% inthe firsttwo

monthsof2012.

It is anticipated to hit almost one billion by the end of 2012, with

emerging economies regaining the lead with stronger growth in Asia

and the Pacific and Africa (4% to 6%), followed by the Americas and

Europe(2%

to

4%).

The

Middle

East

(0%

to

+5%)

is

forecasted

to

recover

partofitslossesfrom2011.

ForeignTouristsarrivals(FTAs)inIndia

The Foreign Tourist Arrivals (FTAs) continued to grow at an inactive

count,withagrowthofjust9.4%intheperiod,JanuaryAprilof2012,as

against12.10%overcorrespondingperiodof2011.

FTAsinIndiagrewbycloseto9%to6.98millionin2011ascomparedto

5.78millionin2010.Ithasexhibitedagrowthof~90%overlast6years

fromapproximately

392

million

travelers

in

2005.

The conventional source markets of US, UK and Western Europe

continued to be the major contributors to arrivals in India. Growth in

arrivalstoAfricaandtheMiddleEastwasweakwhilearrivalstoEurope,

Asia, the Pacific and Americas led the international traveler growth

duringCY2011.

ForeignexchangeEarnings(FEE)inIndia

TheForeignExchangeEarnings(FEE)fromtourismduringtheperiodof

JanuaryApril

of

2012,

addressed

a

handsome

growth

of

28.5%,

as

comparedtothecorrespondingperiodofpreviousyear.

Still, India is lacking behind and losing in foreign exchange because of

huge mismatch between footfalls and growth rates in inbound and

outbound tourism. For example, Issues like multiple taxes and

entertainmentlicensesareslowinggrowthininboundtourism.

Source:UNWTO,MicrosecResearch

7.9

0.13

1.6

10.3

5.9

5.6

6.6

2.1

3.8

6.64.4

3.5

6

4

2

0

2

4

6

8

10

12

500

600

700

800

900

1000

1100

1200

CY2000 CY2001 CY2002 CY2003 CY2004 CY2005 CY2006 CY2007 CY2008 CY2009 CY2010 CY2011 CY2012

%

InMillions

InternationalTouristArrivals %Change

Source:MinistryofTourism,GovernmentofIndia,MicrosecResearch

20.6

3.5

0.1

37.6

34.8

18.5

17.813.7

15.6

7.1

18.1

19.6

10

5

0

5

10

15

20

2530

35

40

10000

20000

30000

40000

50000

60000

70000

80000

CY2000 CY2001 CY2002 CY2003 CY2004 CY2005 CY2006 CY2007 CY2008 CY2009 CY2010 CY2011 JanApril

of

CY2012

%INR(Cr)

ForeignExchangeEarnings(FEE) %Change

Source:Ministry

of

Tourism,

Government

of

India,

Microsec

6.7

4.26

14.3

26.813.3 13.5

14.3

4

2.2

11.8

8.8 9.40%

10

50

5

10

15

20

25

30

0

1

2

3

4

5

6

7

CY2000 CY2001 CY2002 CY2003 CY2004 CY2005 CY2006 CY2007 CY2008 CY2009 CY2010 CY2011 JanApril

ofCY2012

%

inMillions

ForeigntouristArrivals (FTA) %Change


8/27

- 8 -

MicrosecRese25th

June,2012

Indiasroomsupplypipelinecontinuestobestrong

Indiasroom

supply

pipeline

represents

17%

of

the

Asia

Pacific

pipeline.

ItwasmovingataCAGRof10.81%forlast10yearsandisnowpoisedto

growataCAGRof6%innext5years.

The intense supply pipeline would be backed by addition of room

capacitybyallthehotelsbothinIndiaandInternationally.

Thesupplypipelinewouldbeefupalsoonaccountofimprovedforeign

touristarrivals,corporatetravels,etc.

International hotels like Carlson, Strawood, Marriot, etc are the ones

which have chalked out plans to acquire the sufficient market share,

thus,

giving

a

thrust

to

the

Indian

supply

pipeline.

IndiasHotelPerformanceinKeyCitiesinFY12

Indianhotelsperformanceshowedanoverall6%increaseonthesupply

front. New supply was witnessed mainly in new and emerging CBDs

acrossmetros.Though,demandgrewatamoderatepace.

Due to the low economic sentiment, especially in the last quarter of

FY12,thereisanadditionalpressureonrates.

CitieslikeHyderabad,Chennai,Delhisawmajorpositivechangesonthe

supplyperformance

side

and

others

like

Mumbai,

Goa

saw

asurge

on

thedemandside.

GlobalScenario

6.00%

2.90%

2.40%

13.40%

8.70%

7.40%

6.60%

7.40%

3.90%

5.50%

7.00%

4.20%

1.10%

0.80%

1.80%

2.40%

0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00%

India

Goa

Mumbai

Delhi

Jaipur

Bangalore

Chennai

Hyderabad

%ChangeinIndianHotels Performance inKeyCities

Demand%Ch an ge S up pl y%Change

62000

173000

233850

60850

50000

100000

150000

200000

250000

300000

350000

2003 2012 Next5Years

Existing Pipeline

CAGRof9%

Source:MicrosecResearch,CompanyData,

Source:MicrosecResearch,CompanyData,

Source:MicrosecResearch,CompanyData, Source:MicrosecResearch,CompanyData,


9/27

- 9 -

MicrosecRese25th

June,2012

DevelopmentsinFY201112

UpcomingDevelopments

HotelsinPipeline2012/13

Hotels Company Rooms

Taj

TajPalaceMarrakech,Morocco ManagementContract 161

ImperialClubbyTaj,Tardeo,Mumbai ManagementContract 9

VivantabyTaj

VivantabyTaj,Dwarka IHCL 250

VivantabyTaj,Coorg KaveriResorts 62

VivantabyTaj,Gurgaon ManagementContract 200

Gateway

Gateway,Kolkata

Management

Contract

200

Gateway,Raipur ManagementContract 119

Gateway,Gondia BHL 34

Gateway,Hubli ManagementContract 92

GatewayOMR,Chennai ManagementContract 193

GingerHotels(EightinNumber) RootsCorporationLtd 720

NewDevelopmentsinPipeline2012/13include18Hotelsand2040rooms

NewHotelsinFY2011/12

Hotels Indicativetimeline Company Rooms

IHCLDirect/ManagementContract

VivantabyTaj,Yeshwantpur Launched IHCL 327

VivantabyTaj,Srinagar Launched ManagementContract 88

VivantabyTaj,Bekal,Kerala SoftOpening ManagementContract 72

TheGatewayHotel,SasanGir Launched ManagementContract 28

SubTotal 515

Subsidiaries/JVs/Associates

VivantabyTaj,Begumpet,Hyderabad Launched TajGVK 181

VivantabyTaj,Coimbatore Launched OHL 180

GingerHotelsTirupur 2011/12 RootsCorporation 95

SubTotal 456

NewDevelopmentsin2011/12include7hotelsand971rooms.


10/27

- 10 -

MicrosecRese25th

June,2012

HotelsinPipeline 2013/14

Hotel Company Rooms

Taj

TajAirportHotel,CSIA,T1C,Mumbai TajGVKLtd 275

TajPalace,TempleofHeaven ManagementContract 105

VivantabyTaj

VivantabyTaj,Nagpur ManagementContract 255

VivantabyTaj,LakeEnd,Udaipur PiemHotelsLtd 80

Gateway

Gateway,Faridabad ManagementContract 160

Gateway,Banerghatta OHL 209

Gateway,Chiplun ManagementContract 60

Gateway,Shirdi ManagementContract 119

Gateway,Hinjewadi ManagementContract 150

GatewayNashik(Expansion) PiemHotelsLtd 67

GingerHotels(TeninNumber) RootsCorporationLtd 1093

NewDevelopmentsinPipeline2013/14include20Hotelsand2573rooms

9931

10587

1175412243

12795

13629

15508

8288

99103

107

115

130

70

80

90

100

110

120

130

140

8000

9000

10000

11000

12000

13000

14000

15000

16000

FY200607 FY200708 F Y200809 F Y200910 F Y201011 F Y201112 FY201213(E)

Rooms Hotel s

Source:MicrosecResearch,CompanyData

32%

25%

22%

21%

No.ofRooms(%)

IHCL(Standalone) Subsidiaries JointVentures Associates



11/27

- 11 -

MicrosecRese25th

June,2012

SurplusInventory&supplementaryroomrateshurtsroomoccupancy

The slowdown in recovery of occupancy rates in last few years was

primarily due to oversupply of rooms particularly in Delhi, Chennai,

Hyderabad, Bangalore and Pune. Mumbai was the only metro, which

showedanimprovementinoccupancyevenwithflatroomrates.

TheAverageroomoccupancyrate for Indianhotels is~70%for last5

yearsandispresumedtoreach75%innext45years,withthesupport

oforderlysupplyofrooms, revamped foreigntouristarrivals in India,

expansionofdifferentchainsegmenthotelsinIndiaandabroad.

ThemajorreinforcementinitsbudgetspacesegmentalloverIndiaisa

bigpositiveintermsofoccupancy.Nevertheless,hikeinroomratesin

populardestinations

is

ajumbo

count

for

the

company.

AverageRoomRatestogaingroundonprolongedhoteltariffs

The average room rates (ARRs) remained steady for FY12, with a

growth of ~10%, owing to improved domestic tourism and corporate

travel.

ThegrowthinARR/OccupancywasrelativelymutedinFY12.TheARRs

marginalimprovementonthedomesticfrontwasduetomarginalrise

in hotel tariffs of 2%, which attracted both the domestic and

internationaltravelers.

Globally,

there

was

ajump

of

4%

in

the

hotel

tariffs,whichoflategaveaboosttotheARRs.

TheARRsare likelytoshapeup in futureonbackof increase inhotel

tariffs,riseindomesticandinternationaltourism.

Revenueperavailableroomtogetaboost

TheRevenueperavailableroom(RevPar)increasedsignificantlyinFY12

by10%,asaresultofsupplementaryroomratesduringtheyear.

It is expected to forge ahead on account of higher occupancies and

hoteltariffs.




73%

73%

68%

66%

70%

73%75%

78%

60%

64%

68%

72%

76%

80%

FY2006

07A

FY2007

08A

FY2008

09A

FY2009

10A

FY2010

11A

FY2011

12A

FY2012

13E

FY2013

14E

RoomOccupancy

9234

10674

10709

8975 9

873 1

0860

11566

12433

6000

7000

8000

9000

10000

11000

12000

13000

FY2006

07A

FY2007

08A

FY2008

09A

FY2009

10A

FY2010

11A

FY2011

12A

FY2012

13E

FY2013

14E

INR(Cr)

AverageRoomRate(ARR)

672

3

7842

7

084

6104 6

71

4 7386 7

977 8

615

5000

6000

7000

8000

9000

10000

FY2006

07A

FY2007

08A

FY2008

09A

FY2009

10A

FY2010

11A

FY2011

12A

FY2012

13E

FY2013

14E

INR

RevPAR



12/27

- 12 -

MicrosecRese25th

June,2012

RoomIncomeelevatesonbackoftoweringincreaseinroomcapacity

The Room Income (~50% of the total revenue), has moved up

drasticallyinFY11,withajumpof19%overFY10,byvirtueofhigher

room rates and occupancies. Besides, the surge can also be

attributedtoreopeningofTAJMahalPalace,Mumbaiandlaunchof

TAJFalaknama,Hyderabad.

In FY12, the growth contracted to 6% over FY11. Despite the

slowdowninbusiness,theabovementionedrisewasonbackof8%

surmountinaveragedailyroomssoldincludingcapacityincrease.

RoomIncomeisanticipatedtoclimbup~18%byFY14,ongroundof

favorableAverageroomrates(ARRs)andincidentalroomcapacityin

different

chain

segments,

especially

in

Vivanta

by

TAJ

and

Ginger

hotels.

Heftyfood&beverageIncomeonbackofstablebanquetingincome

The Food and Beverage Income honored by 19% in FY11 as

compared to FY10, owningto sturdy growth of banqueting income

of22%.

TheFood&Beverage incomewasup inFY12againstFY11,butata

passiverateof11%,becauseofsuperiorgrowth inrestaurantsales

andbulky

banqueting

income.

The Food and beverage income is expected to improve in coming

yearswiththe launchof forthcominghotelsandrestaurantsacross

thecompanysportfolio.

Managementfeeyettoaugmentgrowth

The Management fee for FY12 was up by 6% owing to higher

turnoverofbothIHCLandNonIHCLHotels.

The other judgment for the higher management fee was the

profitabilityinNonIHCLhotels.

Though, inFY11,themanagementfeewashigherthanFY10figures

by 17%. The major income in terms of management fee would

straighten up more in near future, considering the turnover in the

hotelsunderthecompanysinternationalportfolio.

845.1

978.71

843.19

699.63 834.52

883.27

953.9

3 1049.32

500

600

700

800

900

1000

1100

FY2006

07A

FY2007

08A

FY2008

09A

FY2009

10A

FY2010

11A

FY2011

12A

FY2012

13E

FY2013

14E

INR(Cr)

RoomIncome

521.2 5

85.32

508.99

536.34 6

36.7 7

05.45

754.83

822.77

400

500

600

700

800

900

1000

FY2006

07A

FY2007

08A

FY2008

09A

FY2009

10A

FY2010

11A

FY2011

12A

FY2012

13E

FY2013

14E

INR(Cr)

Food&BeverageIncome




74.2

58.62

66.46

59.97

106.12

112.17

118.90

128.41

50

60

70

80

90

100

110

120

130

140

FY2006

07A

FY2007

08A

FY2008

09A

FY2009

10A

FY2010

11A

FY2011

12A

FY2012

13E

FY2013

14E

INR(Cr)

ManagementFee


13/27

- 13 -

MicrosecRese25th

June,2012

FinancialAnalysis(Consolidated)Radiantoutlookwithmountedmargins

Interms

of

revenue,

the

company

is

growing

at

aCAGR

of

just

5.36%forlast6years.Priortolastsixyears,thecompanygrewat

aCAGRof18.36%. The company witnessed a major slowdown in

FY09,FY10&FY11onthegroundsof1)slowdown inUSeconomy

which blemished the performance of the hotels internationally 2)

terrorist attack in TAJ Mahal Palacein FY10, which impacted

foreigntouristarrivals in India inreturnhammeringtheoccupancy

ratesandfinacialoperationsofthecompany.

IHCL posted Consolidated net sales of INR3432.71 crores in FY12,

registeringasurgeof19.92%againstFY11.Thiswasmainlybecause

of1)

room

revenue

growth

driven

by

8%

increase

in

average

daily

roomssoldincludingcapacityaddition2)higherfoodandbeverage

salesduetosurge inrestaurantsalesandbanquetingbusinessand

managementfee.

TheEBITDAforFY12arrivedat INR545.70crores,whichwasupby

13.31% against FY11. The 6% hike in management fee due to

toweringturnoverandprofitability inNon IHCLhotelscontributed

to these earnings. The EBITDA Margins for the year was 15.90%,

which was merely down by 93bps. We expect the margins to

improve, though not identical to its historic levels, but, at a swift

pace

because

of

enduring

growth

in

revenue,

other

operating

incomeanddecreaseinexpenditurewithrespecttototalincome.

TheexpenditurefortheFY12wasINR2887.01,whichwas84.10%of

total income. It increased by 76bps against FY11, because of 1)

increase in raw material cost in line with 11% hike in food and

beverages revenue and rising commodity input cost 2) annual

increments, launch of new hotels in Bangalore and Hyderabad 3)

riseinemployeecosts4)surmountvariablecostslinkedtobusiness

commensuratecostsofnewpropertiesandhigheradvertisingcosts

onaccountofongoingexpansionofVivantabyTAJ.

The company barged in with consolidated net profit of INR3.06 crores,after posting losses for last 2 consecutive years. The net profit showed a

growthof96.49%againstalossofINR87.26croresinFY11.ThePATmarginfortheyearwas0.09%whichwasupby314bps.

Weexpectthecompanyto grow at aCAGR of 10.28% in terms of revenuefor the next5years on backof1) matured growth rates inforeign

touristarrivals andcorporatetravelwhichwouldsubstanciallyimpacttheARRsandoccupancies,notjustacrossthecompanysportfolio,butalso

the hotels in itsJoint ventures, subsidiaries and associates 2) expansion of hotels in various hotel chain segments, like luxury, upper upscale,

upscaleandbudget segment,thus,cateringtotheneedsofallclassofpeople3)Weakrupeewhichwouldbringcoercionamongthecostconcious

indianstotravelwithinthecountryandresultinrisingroomratesnotonlyinpopulardestinations,but,alsointhemetrocities4)favourableARRs

34.64%33.72%

21.47%

16.21%

15.80%15.90%

15.96%

17.50%14.73%

12.16%

0.48%5.57%

4.07%0.09%

1.60%

3.26%

10.00%

5.00%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

500

0

500

1000

1500

2000

2500

3000

3500

4000

4500

FY2006

07A

FY2007

08A

FY2008

09A

FY2009

10A

FY2010

11A

FY20011

12A

FY200

12

13E

FY20

13

14E

INR

(Cr)

NetSales EBITDA PAT EBITDAMargin(%) PATMargin(%)




14/27

- 14 -

MicrosecRese25th

June,2012

whichwouldboostthedemandoftheallgradesofpeople5)boostup inturnoverandprofitsmainlyfrombyPiem,TajSats,BenaresHotelsLtd

,etcinthedomesticportfolio6)turnovergrowth inRootsCorporationLimited7)growthinturnoverandprofitabilitybyStJames,TIHL,IHMS(A)

andTALHotels&ResortsLtdininternationalportfolio8)fullyretirementofdebtofSamsarapropertiesLtdtwhichwouldboostupprofitmargins,

thoughnot

signoficantly

9)

growth,

but

at

agradual

rate,

in

the

US

hotels.

Subsidiaries/Associates/JointVentures Onthetrailofconcreteturnover

The companys subsidiaries, joint ventures and associates jointly

contribute ~41% revenue to the standalone IHCL. We expect ~45%

growth in coming years on back of 1) growth in UK, US subsidiary in

international portfolio and also in domestic portfolio 2) substantial

contribution from the reopening of The Pierre after renovation 3)

expansioninGingerhotelsthroughitssubsidiaryTheRootsCorporation

Ltd 4) major geographical expansion both in India and abroad 5) large

scale expansion in its Upper Upscale segmentVivanta by Taj through

managementcontractsandsubsidiaries6) improvementinperformance

of hotels underjoint ventures and associates 7) better occupancy rates

andARRs.

1104997

1091 1073

15441621

1702.26

102210

261 254 132 81.05 51.07

9%

21%

24%

24%

9%

5%

3%

30%

25%

20%

15%

10%

5%

0%

300

0

300

600

900

1200

1500

1800

FY200708A FY200809A FY200910A FY201011A FY201112A FY201213E FY201314E

INR

(Cr)

Revenue PAT PATMargin(%)

146

128

156

153

169 1

77.45

186.32

34

19

15

11

4 5.32

9.32

23%

15%10%

7%

2% 3%

5%

0%

5%

10%

15%

20%

25%

0

40

80

120

160

200

FY200708A F Y200809A FY200910A F Y201011A FY201112A FY201213E F Y201314E

INR(Cr)

Revenue PAT PATMargin(%)

62

2520

1520

1015

62

25

57

1620

25

20

10

0

10

20

30

40

50

60

70

FY200708A F Y200809A FY200910A F Y201011A FY201112A F Y201213E F Y201314E

INR(Cr)

Revenue PAT

Source:MicrosecResearch,CompanyDataSource:MicrosecResearch,CompanyData



15/27

- 15 -

MicrosecRese25th

June,2012

DomesticandInternationalSubsidiaries

38

54

63

52

59

61

64

72

75

84 81

7874

78

80

30

40

50

60

70

80

90

FY200910A FY201011A FY2001112A

Occupancy(%)

International

Hotels

of

Taj

ThePierre,NewYork

TajBoston

CamptonPlace,San

Francisco

St.JamesCourt,

London

Blue,Sydney

632

620

598

256

260

273

250

259 2

96

209

171

190

188

252

252

100

200

300

400

500

600

700

FY200910A FY2010

11A F Y20011

12A

USD

ARR(%)

International

Hotels

of

Taj

ThePierre,NewYork

TajBoston

CamptonPlace,San

Francisco

St.JamesCourt,London

Blue,Sydney

240

337

377

133 1

53 1

68

158

186

221

193

139

1491

68

197 2

0

2

100

200

300

400

FY200910A FY201011A FY2001112A

USD

RevPAR(%)International HotelsofTaj

ThePierre,NewYork

TajBoston

CamptonPlace,San

Francisco

St.JamesCourt,London

Blue,Sydney

Source:MicrosecResearch,CompanyDataSource:MicrosecResearch,CompanyData


351.2

3

417.3

9 450

197.6

3

195.7

210

38.9

8

49.8

3

53

19.6

4

20.6

3

35

0.1

2

0

11

40.9

2

40.8

9

57

1.2

8

1.5

5

5.8

0.1

9

0.0

4

2.5

0

50

100

150

200

250

300

350

400

450

500

FY200910A FY201011A FY2001112A

INR

(Cr)

TotalIncomeofMajorIndian subsidiaries

InternationalHotelManagementServices

Inc.

St. JamesCourtHotelsLtd

IHMS(Australia)PtyLtd

Taj International (H.K.) Ltd

SamsaraPropertiesLtd

Taj International HotelsLtd

ApexHotelManagementPTELtd

ChieftainCorporation NV

IHOCOBV


183

.79

168

.16

115

.69

11

.67

15

.65 2

7.2

3

4

.2

5

0.0

7

1.2

3

107

.39

86

.16

56

.25

0.0

1

0.1

7

0.9

3

0 0 0.0

1

0.1

7

0 0.0

6

0.0

3

0

.1

0.0

2

200

150

100

50

0

50

FY200910A FY201011A FY2001112A

INR

(Cr

)

International HotelManagement

ServicesInc.

St.JamesCourtHotelsLtd

IHMS

(Australia)

Pty

Ltd

TajInternational (H.K.)Ltd

SamsaraProperties Ltd

TajInternational HotelsLtd

ApexHotelManagementPTELtd

ChieftainCorporationNV

IHOCOBV



16/27

- 16 -

MicrosecRese25th

June,2012

Associates

NameofCompany CountryofOperation Holding

Domestic

IdealIce&ColdStorageCo.Ltd. India 34.

BenaresHotelsLtd. India 49.

PiemHotelsLtd. India 46.

TajTradeandTransportCo.Ltd. India 46.

TajEnterprisesLtd. India 44.

Taida

Trading

and

Industries

Ltd.

India

41.

InditravelPvt.Ltd. India 47.

OrientalHotelsLtd. India 33.

TajMaduraiLtd. India 26.

KaveriRetreats&ResortsLimited India 22.

International

LankaIslandResortsLtd. SriLanka 24.

TALLanka

Hotels

PLC

Sri

Lanka

24.

JointlyControlledEntities

NameofCompany CountryofOperation Holding(%)

Domestic

TajMadrasFlightKitchenPvt.Ltd. India 50.00%

TajKarnatakaHotels&ResortsLtd. India 38.81%

Taj

Kerala

Hotels

&

Resorts

Ltd.

India

28.30%

TajGVKHotels&ResortsLtd. India 25.52%

TajSafarisLtd India 22.98%

International

TALHotels&ResortsLtd. HongKong 27%

IHMSHotels(SA)(Proprietary)Ltd. SouthAfrica 50%

SubsidiaryCompanies

NameofCompany CountryofOperation Holding(%)

omestic

IFCOHoldingsLtd. India 100%

TCHotelsLtd. India 100%

nitedHotelsLtd. India 55%

ootsCorporationLtd. India 100%

ajSATSAirCateringLtd. India 51%

esidencyFoods&BeveragesLtd. India 98.68%

International

ajInternational

Hotels

(H.K.)

Ltd.

(TIHK)

Hong

Kong

100%

hieftainCorporationNV NetherlandsAntilles 100%

HOCOBV Netherlands 100%

t.JamesCourtHotelsLtd. UnitedKingdom 54.01%

ajInternationalHotelsLtd. UnitedKingdom 100%

nternationalHotelManagementServicesInc. USA 100%

amsaraPropertiesLtd. BritishVirginIslands 100%

HMS(Australia)PtyLtd. Australia 100%

pexHotelManagementServices(Pte)Ltd. Singapore 100%


17/27

- 17 -

MicrosecRese25th

June,2012

QuarterlyAnalysis:MarginsdiponbackofunexpectedsluggishnessinOccupanciesandARRs

Particulars(INR

in

Crores)

Q4FY12A

Q3FY12A

Q4FY11A

YoY

(%)

QoQ

(%)

FY12A

FY11A

YoY

Change

(%)

NetSales 560.15 521.48 530.87 5.52% 7.42% 3432.71 2862.47 19.92%

ShareofProfitsinAssociates 0 0 0 0 29.24

OtherOperatingIncome 0 0 0 0 0

TotalIncome 560.15 521.48 530.87 5.52% 7.42% 3432.71 2891.71 18.71%

TotalExpenditure 400.96 380.78 345.25 16.14% 5.30% 2887.01 2410.09 19.79%

as%ofsales 71.58% 73.02% 65.03% 84.10% 84.20%

EBITDA 159.19 140.70 185.62 14.24% 13.14% 545.7 481.62 13.31%

EBITDAMargin(%) 28.42% 26.98% 34.97% (655)bps 144bps 15.90% 16.83% (93)bps

Depreciation 31.89 26.51 27.98 13.97% 20.29% 255.07 227.89 11.93%

EBIT 127.30 114.19 157.64 19.25% 11.48% 290.63 253.73 14.54%

EBITMargin(%) 22.73% 21.90% 29.69% (396)bps 83bps 8.47% 8.86% (39)bps

Interest 29.53 30.35 26.53 11.31% 2.70% 193.38 251.17 23.01%

OtherIncome 9.9 8.59 15.43 35.84% 15.25% 50.78 35.73 42.12%

PBTbeforeexceptionalitems 107.67 92.43 146.54 26.53% 16.49% 148.03 38.29 286.60%

exceptionalitems 1.11 14.81 1.94 42.78% 92.51% 0.46 15.74 102.92%

PBTafterexceptionalitems 106.56 77.62 144.60 26.31% 37.28% 147.57 54.03 173.13%

PBTMargin(%) 19.02% 14.88% 27.24% (822)bps 414bps 4.30% 1.89% 241bps

Tax 41.35 27.14 50.67 18.39% 52.36% 121.75 93.66 29.99%

Tax(%) 38.80% 34.97% 35.04% 82.50% 173.35%

PATbeforeextraordinaryitems 65.21 50.48 93.93 30.58% 29.18% 25.82 39.63 165.15%

Extraordinaryitem 0 0 0 0 0

PATafterextraordinaryitems 65.21 50.48 93.93 30.58% 29.18% 25.82 39.63 165.15%

MinorityInterest 0 0 0 38.4 11.66 229.33%

SharesofProfit&LossinAssociates 0 0 0 15.64 35.97 143.48%

PATafterminorityinterest 65.21 50.48 93.93 30.58% 29.18% 3.06 87.26 103.51%

PATMargin(%) 11.64% 9.68% 17.69% (605)bps 196bps 0.09% 3.05% 314bps

PaidupEquityShareCapital 75.95 75.95 75.95 75.95 75.95

BasicEPS

0.86

0.66

1.24

30.58%

29.18%

0.04

1.15

103.51%

AdjustedEPS 0.86 0.66 1.24 30.58% 29.18% 0.04 1.15 103.51%

The Q4FY12 arrived with net sales of INR560.15 crore, which was reasonably up by 7.42% sequentially and 5.52% on YoY basis. This was mainly

throughthemediumofthetoplinegrowthdrivenbynewcapacityandFood&beveragesales.



18/27

- 18 -

MicrosecRese25th

June,2012

TheEBITDAforthequarterturnedupatINR159.19crore,whichwasupby13.14%sequentially,but,cascadedby14.24%onyearlybasis.TheEBITDA

Margincameat28.42%,whichwasagainupby144bpssequentially,but,downby655bpsonyearlybasis.

The

fall

in

EBITDA

Margins

on

yearly

basis

was

due

to

a)

abrupt

sluggishness

in

occupancies

and

ARRs

b)

increase

in

staffing

costs

and

operating

expendituretothenewlylaunchedVivantabytajatBengaluruandc)noncashforeignexchangelossduetoadversecurrencymovements.

IHCLpostedaNetprofitofINR65.21crores,whichwasdescendedsharplyby30.58%onyearlyground,butoutperformedsequentiallybymarching

upby29.18%. Q4FY12attainedanetprofitmarginof11.64%,whichwasupby196bpssequentially,butdownby605bpsonyearlybasis.

TheEPSforthequarterwasINR0.86pershareascomparedtoINR0.66pershareinQ3FY12andINR1.24pershareinQ4FY11.

PeerComparison

KeyRisks&Concerns

HeavyCredenceonIndianoperations:IHCLheavilydependsonIndiasoperationsonforeigntouristarrivals,Foreignexchangeearningsandvisa

ontravels,

etc,

which

makes

it

inclined

to

the

domestic

economic

conditions.

Moreover,

the

operations

and

earnings

are

essentially

concentrated

in

keycities,mainlymetrocities.

CompetitionfromInternationalChain:TheIndiansubcontinent,SouthEastAsiaandAsiaPacificwithhighgrowthrateshavebecomethefocus

areaofmajor internationalchains.Severalofthesechains likeCarlson,Starwood,Marriot International,Accor,Hiltonand IntercontinentalHotels

have announced their plans to establish hotels to take advantageofthe demand supply imbalance. These entrants are expected to intensify the

competitiveenvironmentinthecomingyears.ThesuccessofTajGroupwillbedependentuponitsabilitytocompeteinareassuchasroomrates,

quality of accommodation, brand recognition, service level, and convenience of location and to a lesser extent, the quality and scope of other

amenities,includingfoodandbeveragefacilities.

Foreign exchangefluctuation risks:IHCL has a portfolio of foreign currency debt, in respect of which it faces exposure to fluctuations in

currencyaswellasinterestraterisks.

Dependence on the highend Luxury segment: Luxury hotels contribute a significant proportion of the total revenue and earnings of the

Company.Thissegmentisaffectedbytheinternationaleventsandtravelbehaviorandsuffersfromhighoperatingleverage.Adversedevelopment

affectingthesehotelsorthecitiesinwhichtheyoperatecouldhaveamateriallyadverseeffectonIHCL.

Source:CompanyData,MicrosecResearch,Bloomberg,INRinCrores


19/27

- 19 -

MicrosecRese25th

June,2012

Valuation

WefollowedDiscountedCashFlow(DCF)approachtovalueIndianHotelsCompanyLimited(IHCL). Adescriptionofthevaluationisasfollows:

DiscountedCashFlow(DCF)

We utilized Weighted Average Cost of Capital (WACC) of 7.98% to discount the future earnings of Indian hotels Company Ltd (IHCL). In

addition, we applied a terminal growth rate of 2.50% for the earnings beyondFY2016E. We arrived at the WACC with a Cost of Equity of

11.69%,post taxCostofDebtof4.45%,andDebttoEquityof1.05x.ByadoptingCapitalAssetPricingModel(CAPM),wearriveatCostto

Equity basedon MarketReturn of12.28%,RiskFreeRateof8.06%andBetaof0.86x. Furthermore, theCostof Debtrepresentsexpected

interestcost

after

deducting

the

tax

impact.

With

this,

our

DCF

valuation

reflects

atarget

price

of

`80.62

for

the

stock

with

aperiod

of

1year,

whichreflectsanupsideof35.15%fromtheCMPof`59.65.


20/27

- 20 -

MicrosecRese25th

June,2012

IncomeStatement

Source:CompanyData,MicrosecResearch,Note:TataSonsLimiteddatedJune22,2012,hasexercisedtheoptiontoconvert4,80,00,000Warrantswhereeach

WarrantentitledTataSonsLimitedtosubscribetooneOrdinaryShareoftheCompanyofINR1/ eachoftheCompanyatINR103.64pershare


21/27

- 21 -

MicrosecRese25th

June,2012

BalanceSheet

Source:CompanyData,MicrosecResearch,INRinCrores,Note:TataSonsLimiteddatedJune22,2012,hasexercisedtheoptiontoconvert4,80,00,000Warrants

whereeachWarrantentitledTataSonsLimitedtosubscribetooneOrdinaryShareoftheCompanyofINR1/ eachoftheCompanyatINR103.64pershare


22/27

- 22 -

MicrosecRese25th

June,2012

CashFlowAnalysis

CashFlow

For

the

Year

Ended

March,

31st

Particulars(INRinCrores) FY200809A FY200910A FY201011A FY201112A FY201213E FY201314E

A.CashFlowFromOperatingActivities

NetProfitBeforeTax 158.51 33.73 24.75 147.57 182.33 304.60

Depreciation 188.46 218.54 227.95 255.07 254.97 271.36

Loss/(Profit)onassetssoldordiscarded 2.71 4.49 0.82

AmortizationofVRSexpenditure 0.3 0 0

profitonsaleofinvestments 0.04 39.16 4.08

Unrealizedexchangegainonfinancingactivities 20.9 2.39 14.08

ProvisionforDoubtfuldebts 4.5 8.22 4.15

ImpairmentofGoodwill 0 0 3.26

Expensesondiscountedprojectwrittenoff 0 0 5.2

Profitonsaleofhotels 2.03 5.72 4.29

InterestExpenses 230.46 306.14 251.15 193.38 193.60 191.60

InterestIncome 0 0 0.02

DividendIncome 48.74 20.08 17.89

Contingentprovisionagainststandardassets 0 0 0.12

Provisionforcontingentclaims 0 0.64 5.32

ProvisionforLoyaltyprogram 1.61 2.2 0.19

Provisionforcontingencies 0.2 0 0

ProvisionforEmployeeBenefits 11.09 0.66 9.03

OperatingProfitbeforeWCchanges 562.51 430.83 473.06 596.02 630.90 767.55

(Increase)/DecreaseinInventories 9.22 2.48 6.20 27.82 2.60 4.45

(Increase)/DecreaseinSundryDebtors 71.47 9.56 59.53 81.80 16.90 39.09

(Increase)/Decreaseinloansandadvances 0.00 0.00 0.00 19.80 68.35 48.25

Increase/(Decrease)inCurrent&Liabilities 48.50 56.55 12.49 58.28 130.91 73.32

(Increase)/DecreaseinOtherCurrentAssets 0 0 0 64.74 64.74 0

Cashgeneratedfromoperations 530.32 480.30 526.30 460.14 875.40 845.58

Directtaxespaid 191.42 53.19 13.61 121.75 127.63 152.30

NetCashfromOperatingActivities 338.9 427.11 512.69 338.39 747.77 693.28

B.CashFlowFromInvestingActivities

PurchaseofFixedAssets 793.64 508.51 412.65 641.17 400.00 250.00

SaleofFixedAssets 12.83 65.19 106.13


23/27

- 23 -

MicrosecRese25th

June,2012

SaleofInvestments 12 7720.93 3089.05

(Purchase)ofInvestments 352.11 7103.27 3717.24 601.91 160.58 84.00

InterestReceived

32.55

25.35

51.53

DividendReceived 69.45 34.77 31.98

DepositsRefundedby/(Placedwith)OtherCompanies(Net) 142.13 69.97 67.86

NetCashusedinInvestingActivities 1161.05 304.43 783.34 39.26 560.58 334.00

C.CashFlowFromFinancingActivities

DebentureIssue/Loanarrangementcosts 12.87 23.3 0.52

Repaymentoflongtermloans&debentures 192.63 791.32 364.34

Proceedsoflongtermloans&debentures 1287.4 1957.4 49.51 150 150

ShortTermLoansRaised/(Repaid)(Net) 449.47 1133.59 119.51 18.4 13.4

LongTerm

Trade

Deposits

Raised/(

Repaid)

30.67

1.89

8.66

Shareapplicationmoney 0.15 0 0

ProceedsfromissueofEquityshares 823.9 1.02 498.04 497.47

ProceedsfromissueofPreferencesharesbyasubsidiary 120 0 0

InterestPaid 230.1 324.43 290.68 193.38 193.60 191.60

DividendPaid(includingtaxondividend) 145.49 107.53 88.68 63.63 67.02

NetCashfrom/(Used)infinancingactivities 1231.56 423.64 85.82 193.38 71.84 422.02

Net(Increase)/Decreaseincash&cashequivalents 409.41 307.9 356.47 105.75 259.03 62.73

Cash&CashEquivalentsatbeginning 260.21 252.84 548.72 195.38 172.60 431.63

ImpactofEx.FluctuationsonCashandCashEquivalents 8.88 12.02 3.13

Cash&CashEquivalentsatEnd 678.5 548.72 195.38 301.13 431.63 368.89



24/27

- 24 -

MicrosecRese25th

June,2012

RatioAnalysis



25/27

- 25 -

MicrosecRese25th

June,2012

MicrosecResearch:PhoneNo.: 913330512100 Email:[email protected]

AjayJaiswal:

President,

Investment

Strategies,

Head

of

Research:

[email protected]

FundamentalResearch

Name Sectors Designation EmailID

NitinPrakashDaga IT,Telecom&Entertainment AVPResearch [email protected]

NaveenVyas Midcaps,MarketStrategies AVPResearch [email protected]

GargiDeb Agriculture&Pharma ResearchAnalyst [email protected]

SutapaRoy Economy ResearchAnalyst [email protected]

SanjeevJain BFSI ResearchAnalyst [email protected]

AnikDas MidCap ResearchAnalyst [email protected]

NehaMajithia MidCap ResearchAnalyst [email protected]

SoumyadipRaha MidCap ExecutiveResearch [email protected]

SarojSingh MidCap ExecutiveResearch [email protected]

Technical&DerivativeResearch

VinitPagaria Derivatives&Technical VP [email protected]

RanajitSaha TechnicalResearch Sr.Manager [email protected]

InstitutionalDesk

DhruvaMittal InstitutionalEquities Sr.Manager [email protected]

PujaShah InstitutionalDesk Dealer [email protected]

PMSDivision

SiddharthSedani PMSResearch AVP [email protected]

KetanMehta PMSSales AVP [email protected]

Research:FinancialPlanningDivision

ShrivardhanKedia FPDProducts ManagerResearch [email protected]

ResearchSupport

SubhabrataBoral ResearchSupport Asst.ManagerTechnology [email protected]

Recommendation

StrongBuy >20%

Buy between10%

and

20%

Hold between0%and10%

Underperform between0%and10%

Sell


26/27

- 26 -

MicrosecRese25th

June,2012


27/27

Disclaimer:This document is prepared by the research team of Microsec Capital Ltd. (hereinafter referred as MCL) circulated for purely information purpose toauthorizedrecipientandshouldnotbereplicatedorquotedorcirculatedtoanypersoninanyform.ThisdocumentshouldnotbeinterpretedasanInvestmtaxation/legaladvice.Whiletheinformationcontainedinthereporthasbeenprocuredingoodfaith,fromsourcesconsidered tobereliable,nostatementireportshouldbeconsideredtobecompleteoraccurate.Therefore,itshouldonlyberelieduponatonesownrisk.

MCL is not soliciting any action based on the report. No indication is intended from the report that the transaction undertaken based on the informcontained in this report will be profitable or that they will not result in losses. Investors must make their own investment decisions based on their sp

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