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Juniper Hotels Ltd
NSE:JUNIPER
Juniper Hotels Ltd
NSE:JUNIPER
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Earnings Call Transcript
Transcript
Other Earnings Calls
Ladies and gentlemen, good day, and welcome to the Q3 FY '25 earnings conference call hosted by Juniper Hotels Limited. [Operator Instructions] Please note that this conference is being recorded.
This conference call and this presentation prepared by Juniper Hotels Limited, has been solely prepared for information purposes and does not constitute a sale offer or any invitation to subscribe for or purchase of equity shares. The information and data which forms the basis of this presentation has been derived from sources that the company considers to be reliable.
Certain statements disclosed in this presentation or that may be disclosed over this call may relate to company's growth prospects that are forward-looking statements within the meaning of applicable securities laws and regulations. These forward-looking statements are not guarantees of future performance as they are subject to known and unknown risks, which are beyond the control of the company.
I now hand the conference over to Mr. Varun Saraf, CEO from Juniper Hotels Limited. Thank you, and over to you, Mr. Saraf.
Thank you. Good afternoon, everyone, and thank you for joining us on our earnings call. I would like to start by informing everyone that Juniper Hotels has received a letter of intent from Saraf Hotels regarding exercising of their ROFO option. This letter of intent has been tabled before the Board, and the Board has formed a committee to evaluate this opportunity.
The 2 hotels under acquisition are Hyatt Regency, Mumbai, and Hyatt Regency, Chennai. These potential value-accretive acquisitions will add approximately 750 keys to the Juniper portfolio and will have an immediate impact on the company's performance. One of the assets is already operational and the other one is expected to be operational by the end of the current calendar year.
The management is currently exploring scenarios on how to integrate these assets within the Juniper portfolio in the most efficient manner. We have onboarded industry experts and consultants to advise us regarding the structuring of these acquisitions. Details about the structure, cost and time lines will be disclosed in due course.
To further update you on our Bangalore acquisition, we have taken over the possession of the asset. Currently, a team of 20 people have been deployed on site led by our Project Head. The team has initiated interior works and MBP work streams in the rooms and the public area. We have onboarded the original designers and contractors to complete the hotel. The time line for opening the Bangalore hotel would be the end of the current calendar year. This acquisition in Bangalore will add approximately 240 rooms to our existing portfolio of rooms.
A second acquisition has been also -- we have also received Board approval for the acquisition of a Kaziranga leasehold land to develop a 5-star luxury hotel close to the National Park. It is proposed to be a 120-room luxury resort to be operated by Hyatt. Currently, the designing and planning is underway, and we hope to start construction in Q3 of the current calendar year.
The hotel will be operational by 2029, and we expect estimated CapEx of approximately INR 100 crores. With 2 confirmed hotels and 2 potential acquisitions on the table, I'm proud to say, in the first year of the listing of Juniper Hotels, we have visibility on adding approximately 1,100 rooms and 4 hotels to our existing portfolio.
Further, Grand Hyatt, Mumbai has completed all renovation works. What we had started pre-IPO about 18 months ago is now complete. The showroom, the new restaurants, Celini, the bar and 400 rooms renovation for which has all been completed and the hotel is fully operational with all revenue streams kicking in.
With this, I would like to give you to -- hand over to Tarun Jaitly, our CFO, to give the overview on the numbers.
Thank you, Varun. On the performance side, since the presentation is already there with everybody, I'll just stick to some of the key highlights for the quarter. Q3 FY '25 saw us achieving the highest income. Revenue at INR 261 crores is up 17% sequentially, primarily driven by star performance of Andaz and Grand Hyatt ARRs. Both the assets have actually outperformed the comp set -- peer comp set as far as the ARR performance is concerned year-to-date. The strong ARR performance continues in Jan, where at Grand Hyatt and Andaz, both the assets are seeing between 10% to 12% Y-o-Y increase in ARR even in Jan '25.
Another important facet is that we've achieved the highest EBITDA of INR 101 crores in third quarter, which is a 39% sequential growth. Importantly, EBITDA margin has improved to 39% from 33% in Q2, and we are on track to achieve a normative EBITDA levels of around 42%, 43% at the corporate level.
Grand Hyatt -- the operating profit of Grand Hyatt at the operating level has increased in Jan from 43% to upwards of 50%. And this is an important factor which underlines the fact that the Grand Hyatt is achieving stabilization. And the performance of Grand Hyatt now going forward will contribute to the performance of overall company as we move forward in the next few quarters.
Strong top line and EBITDA growth has led to a PBT of INR 43.5 crores, which is 118% sequential growth. In this quarter, there is INR 11 crore notional reversal of the [ GTA ], net of which the PAT is INR 32.5 crores, which is significantly above the last quarter.
With that, I'd like to hand over to Mr. Mammen, who is the COO, to give you a brief business overview, and then I will step back in.
Good afternoon. Q3 '25 has been a strong quarter marked by the full operational return of Grand Hyatt, Mumbai, since December '24, following the successful completion of refurbishment across rooms, the Grand Club and the Grand showroom. The grand showroom launch has been a resounding success, setting a new benchmark for premium event space in the city. It's widely embraced as the preferred venue for high-end social and corporate events.
Andaz delivered exceptional performance, achieving a 25% year-on-year increase in RevPAR, outpacing competition set at 19% growth. Compared to the previous year, ADR in Andaz surged 29% and 28% on year-on-year growth based on strong market performance, contract renegotiations on rates, which has been the strategy of the portfolio. The total revenue for the quarter stands at INR 261 crores, which is a sequential growth of 18%. ADR grew sequentially at 19% and RevPAR at 25%.
The outlook for the next few quarters continues to be robust, driven by strong corporate demand, large-scale corporate events and high-profile social gatherings across the portfolio. We will possibly outperform comp set based on the fact that Grand Hyatt, Mumbai has returned to stabilization. IT business mix is another focus area across the group and a sharper focus on revising our F&B across the hotels.
Over to you, Tarun.
Thank you, Mr. Mammen. Another important factor that I want to share is that our balance sheet strength remained very strong. Our debt position, the net debt position to EBITDA at 1.5x, net debt of INR 540 crores as of December quarter 3. We have a significant headroom for growth capital to fund the proposed acquisitions, as Varun touched upon in the earlier part of the speech. Our balance sheet ratios, whether on the working capital side or the gearing side remains fairly healthy.
And with that, I would like to conclude the presentation and throw the floor open to questions.
[Operator Instructions] The first question from the line of Abhay Khaitan from Axis Capital.
So my first question is, actually has 2 parts. So firstly, on the -- for the luxury hotels. So in the presentation, you have mentioned the ARR growth is 14% Y-o-Y. And now that you have mentioned that for Anda, RevPAR growth is 25%. So just wanted to understand the ARR growth between Andaz Delhi and Grand Hyatt Mumbai, how has it fared between the 2 hotels? And for in particularly Andaz, I wanted to understand if you have taken a high double-digit ARR growth there, how much do you think it can sustain going forward?
So look, as I said, there are 2 parameters that I would like to share with you, that on an ARR basis, both Grand Hyatt and Andaz have outperformed the comp set -- peer comp set. So just to share the specific numbers, and I'm giving you YTD numbers, Grand Hyatt ARR growth of 8.4% vis-a-vis the comp set of 6.1% and Andaz 19.1% vis-a-vis 4.3%. And this is when I say YTD, I'm talking about the December month, right -- up to December month.
And the trajectory continues in Jan, as I said, in January and to give you specific numbers, on top of the ARR growth, which we saw till December, Grand Hyatt has seen a 12% Y-o-Y variance in ARR positive, and Andaz 10% ARR growth in Jan. So that trajectory continues. And we believe with the more fresher products in Grand Hyatt and also improved -- our focus on improving the contribution of transient [ and ] group, we should see outperformance continue on the ARR side for Juniper from these 2 assets.
So for Grand Hyatt Mumbai, given the renovations, are you expecting a higher ARR growth going forward?
That is right. That's what I said. There are 2 factors, right? One is a fresher product. And second is the focus on transient [ and ] groups. So these would be the 2 factors which will enable us to do better than the comp set and continue to do so going forward.
Another important thing which I want to share just to cap up this is, as I shared earlier in my earlier part of the speech, in Jan, the operating performance, at the operating level, the operating EBITDA of Grand Hyatt increased from 43% to 50%. This basically underlines the fact that Grand Hyatt is getting back into normalcy and being the mothership, which is 50% of the corporate EBITDA came from Grand Hyatt. This will be a significant positive influencer for our EBITDA going forward as well.
To further add to that, you asked the question on Andaz and whether we'll be able to sustain that. I believe that Q4 will be very strong, and that will continue going forward as well. The growth may not be at the same level, but we will definitely be able to sustain the current RevPAR and head on a -- in a positive direction.
That was helpful. I also wanted to understand about other upscale and [ upper ] upscale hotels as well. So for them, I see the ARR has actually declined Y-o-Y in the third quarter. So any particular reason? Is it because any particular hotel that we are seeing? Or is it overall an industry trend? Because even in the industry data, we have been seeing that non-metro cities have actually done worse than metros. So is that more on back light? Or is there any particular asset that has underperformed?
So on the upper upscale, the only asset which you see is Ahmedabad, and that was also because last year comparative period, there was even specific ARR increase. So it's a higher base effect that you saw in Ahmedabad. But again, I would say that Ahmedabad is operating today at 98% occupancy for the past 2 consecutive months. So this is on additional capacity. The room additions that we had done, that got fully absorbed and it's operating at significant occupancy levels. And we believe that given the strength in the micro market in Ahmedabad, the ARR will continue to hold firm.
So we do not see a decline in the non-metro cities in the upper upscale in terms of rate. I think the rates will hold and only increase.
And then last question is on the EBITDA margin. So we have seen for the quarter that it has declined to 37%, but I guess this includes the renovation cost that happened in Grand Hyatt Mumbai as well. But once that is done, what is the ideal consolidated EBITDA margin that you are looking at? And what will be the driver of that?
So look, I said, I already shared that with you, right? I mean in Q3, there was roughly around 140 rooms, which are out for almost 40 days in this quarter in Grand Hyatt. That is the impact which was there in 3Q. Despite that, we've kind of held the EBITDA at INR 102 crores and the EBITDA margin has increased by -- from 33% to 39%. We are on track to achieve 42%, 43% EBITDA. What will drive it, as I said, in Jan, Grand Hyatt, which was at 43% has gone up to 50% plus at the asset level. Delhi is already operating at 50%. So this would be the key contributor to margin improvement over the next few quarters.
The next question is from the line of Lokesh Manik from Vallum Capital.
The first question was on the non-luxury side of the portfolio. So, when you say that the EBITDA is -- 50% is contributed by Grand Hyatt, then the rest 50% comes from non-Grand Hyatt hotels, are they under-indexed to the parent company where the margins in my estimation would come somewhere around 25% versus Grand Hyatt is coming at 50%? So any steps we are taking out there to bring that up to the [ consol ] level or the comp set level of 40% EBITDA margins?
If I understood your question, you say that normally for smaller-sized hotels, you've seen EBITDA at around 20s or mid-20s. Is that what you -- if I have understood correctly?
Yes.
Okay. So for us, traditionally, and this is not just for this quarter, we are fairly efficient from the perspective of the EBITDA that we get from our assets that we own. Even the smaller assets. For instance, if I were to give you an example in quarter 3, the asset level EBITDA for an asset like Hampi would be 46%. While in the INR crore, it's a smaller contribution because of a much smaller asset than Grand Hyatt. But as a percentage, it's 46% EBITDA at the asset level. So we -- as far as EBITDA is concerned on these smaller assets, we obviously are doing much better than what other industry sector peers are able to achieve.
My second question was on the new asset acquisition in Assam property. There, we are planning 116 rooms. And as per past commentary, you mentioned that any asset you acquired, you would want big box assets, at least 300 keys, and this is 116. So any reason for deviation from that strategy for Assam?
Sure. So our focus still remains on big box assets. But when we actually get an opportunity in niche segments, we will also continue to explore those. For example, so Assam government has come up with a scheme to promote the National Park. At the end of the day, we are in the tourism space. This luxury asset of 120 rooms will help in the development of the much-needed infrastructure to promote tourism in that sector.
If you came through the recent budget, right, the government is promoting various destinations. So we are aligned with the India growth story. Our business hotels will be our focus. But when actually value-accretive opportunities for development comes in, when we can integrate with the India growth story, we would also be exploring those. I believe this 120-room hotel in Kaziranga will be the first branded hotel there. It will open up the Northeast for future tourism development as well. And I think it would be a good addition to our portfolio.
Do you have space to expand if required in the future?
The size is actually -- no, the land is big, but we're actually going to build 120. If opportunity presents, yes, we will expand. But currently, we do not see that requirement coming up immediately.
The next question is from the line of Saurabh Bansal from Star Finvest.
I have 2 questions on the ROFO intimation, which has been given. Question one, is there a time line by which the company plans to take a decision or a final call on this? Also because -- is there any deadline which has been given in the ROFO offer by the promoters by which the company needs to take a call? So that is question one, please.
So on the time line, as I said, the Board has created a committee. The committee will start the evaluation process. We hope by -- before the end of the current financial year, we should have some clarity on this. As you're -- yes, that's the time line.
All right. Is there any deadline which has been given in the ROFO by which the company needs to take a call?
There is no deadline as such, which has been given in the ROFO letter. But as you're aware, the promoters are the ones who are -- promoters at Juniper are the ones who have exercised this ROFO option. And we do have some control on that side in terms of the time lines as well.
So I'll just add to what Varun is saying. Hi, Tarun here. This ROFO was discussed at the Board and the Board directed us, the management, to constitute a subcommittee. And the intent of that is to take it in a speedy manner and expeditiously and revert back on the assessment of ROFO and reply back to the Saraf family.
And the second part is that how would you be looking at valuing these assets? For example, in the previous calls, you have already highlighted that it's mostly going to be a noncash transaction. So, what would be the thought process in terms of valuing these assets? Will it be on an NAV basis, book value basis, replacement cost models? Any direction or any indication that you could give?
Yes, Saurabh. So as we've discussed in the past is that this is a process. We have taken a few steps already. And I would say that this ROFO invocation letter is a major milestone, constitution of the subcommittee is a major milestone in that entire journey. The -- As for the direction to the management, we have to evaluate the most optimal manner to get this in, which we are in the process of.
There are options in which we can get this integrated into Juniper, most likely could be a cash swap -- sorry, a share swap.
[Operator Instructions] We have the next question from the line of Abhay Khaitan from Axis Capital.
So my question is on the Kaziranga project. So basically, the circular mentions that this is more of a PPP project. So just wanted to understand whether this entire hotel will be 100% held by Juniper or is there some other government stake as well? And secondly, on the INR 100 crore CapEx that you have been talking about, so what will be the split of this CapEx? How much of this will be spent in the next 2, 3 years and how much in the end?
Sure. So this is not a PPP project. This is a [ leasehold ] land, which we have taken for 99 years. So it is 100% owned by us. The lease belongs to Juniper Hotels.
The second part in terms of CapEx, the CapEx will be spread over 3 years. We do intend to start construction in September of this year, so it's in September 2025. It's a 3-year project construction, 3 to 3.5 years. The initial design phase will be for about 6 to 9 months, which will require very minimal investment. Once the full swing construction starts, the funds will be used in a proportionate manner. So it would be spread across the 3.5 years starting September.
[Operator Instructions] The next question from the line of Saurabh Bansal from Star Finvest.
Just one simple question. What is the kind of thought behind the management when they look at setting up a new project in terms of the IRR that the company wants to generate on that?
So we usually try and target high teens. Yes. So one of our criteria is the land cost needs to be within a certain limit here. At least if you're referring to the Kaziranga acquisition, it is -- the land cost is very nominal. And the opportunity that presents itself will be very valuable for the company.
Also, just one more thing. Will there be a swap, let's say, a noncash swap for both of the possible ROFO assets under consideration? Or will it be a case-to-case basis as to a cash and a noncash transaction?
So most likely, both the assets will come in, in a share swap.
[Operator Instructions] We have the next question from the line of Aman Goyal from Axis Securities.
My question is related to outlook on the corporate MICE events. Do you see any slowness in this segment? I mean, there is a sluggish growth in the economy? And do you see any lagging on this part?
No. As I mentioned in my speech, we see a robust demand driver for the next 2 to 3 quarters. That's the indication.
[Operator Instructions] We have the next question from the line of Sugandhi from FedEx Securities.
Congratulations on the great results. My question is with regard to the ROFO assets again. Could you give us an idea about, if [ deals ] are going to go through, what kind of net debt-to-equity we are looking at? I mean, just trying to get an idea of how much leverage we have in these assets?
So if we look at both the companies, on one of them, which is already operational, the debt level when it will come in would be -- from a net debt perspective, it would not carry any net debt. On the second one, we could look at 1x to the expected EBITDA of debt that would come in along with that asset. But from a Juniper standpoint, with both the assets coming in, we would still be within the limits of net debt-to-EBITDA that we have set for ourselves on a sustainable basis, of roughly around 2.5x on a sustainable basis. I think with those 2 assets coming in, we would still be around there.
And what -- could you give us an idea of how long it would take for you to bring the second asset up to operational levels in terms of number of months or the amount of -- I'm not sure if you can share this, amount of expenditure it would entail in terms of time and just CapEx?
So we are expecting, as per the current estimate, the way I understand it, the work stream to get that asset operational is already underway. Significant amount of work has already been done. Our estimates are that the Mumbai asset should become operational by the end of this calendar year and should start contributing as we get into FY '26.
I would also like to take this opportunity to extend a formal invite to anybody who is interested in visiting that hotel. Our IR team can organize a visit and communicate a day and coordinate and take your convenience and coordinate the time for the visit to the asset in Mumbai.
Okay. And the other asset, any numbers you can share on capacity utilization?
Sorry?
The occupancy levels of the Chennai asset?
So just give us a second. Chennai today would be upwards of 78% to 80% occupancy. And we expect a significant occupancy level in the asset in Mumbai once it becomes operational.
[Operator Instructions] The next question is from the line of Aman Goyal from Axis Securities.
My question is related to Grand showroom. So what is the reported revenue for this quarter? And what is the EBITDA margin for the showroom?
As I mentioned to you, the showroom is a very premium space, and we are targeted upwards of INR 30 crores for the year. And basically we're well on track in terms of the kind of profile and kind of base that we are able to drive. It's a process, but we are pretty confident we'll get there.
And sir, what about subsidiary, CHPL? What is the reported revenue and operating margin for the subsidiary like for the 9 months or for this quarter?
So CHPL should be roughly around INR 24 crores, INR 25 crores of revenue. I'll give you the exact number. And if you were to look at again an asset EBITDA, I will share that Lucknow was at around 46%. As already stated, Hampi was at 46% and Raipur at around 36% EBITDA at the asset level in total.
What about Ahmedabad?
Sorry, Ahmedabad does not come into Chartered. Ahmedabad is within Juniper. So you ask --
INR 24 crores you said for Q3, right?
Yes, these are Q3 numbers, yes.
[Operator Instructions].
So I think since there are no further questions. I would just answer the specific number that was asked on Chartered and then we could end the call. The EBITDA for Chartered for Q3 is roughly INR 14 crores and the top line -- gross top line, including the Chartered Hampi 3 asset is INR 37 crores for the quarter 3.
As we have no further questions, I would now like to hand the conference over to Mr. Tarun Jaitly, CFO, for closing comments. Over to you, sir.
Thank you, everybody, for taking time out to coming on to this call. As I said, there's an invitation we would like to extend to everyone. If anybody is interested in seeing and visiting the Mumbai hotel assets and if there are any follow-on queries, feel free to reach out to us. Thank you again for taking time. Have a nice day.
Thank you. On behalf of Juniper Hotels Limited, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.