byke hospitality limited buy...its strategy over all the fronts (business locations - mumbai,...

Byke Hospitality Limited Buy

- 1 - Thursday, 7th June, 2018

2018

This document is for private circulation, and must be read in conjunction with the disclaimer on the last page.

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Target Price ₹351 CMP ₹168 FY20E P/E 20X

Index Details During FY13-18 while the entire hospitality industry was reeling

under the twin impact of a glut in room inventories, falling

occupancies and lackluster ARRs, Byke Hospitality Ltd (Byke) had

managed to buck the trend and exhibit a strong performance. Since

then the industry has witnessed significant consolidation and with

room inventories expected to lag demand and ARRs also having

bottomed out, we expect the industry to report a much better

performance than that of the entire past decade. Byke is well

positioned to benefit from the uptrend given its asset light model,

strategic locations of its properties and adequate new capacity in

the midscale segment.

We expect occupancies to rise by 300 bps to 71% and ARRs to

improve by 4.3% to INR 4390.9 despite a robust growth of 16.7%

CAGR to 1359 units of room inventory by FY21. This is expected to

buoy revenue growth of 22% CAGR to Rs 322.3 crore by FY21. Over

the same period, we expect a strong growth in profitability to be

maintained. EBIDTA and net earnings are expected to grow by 22.5%

CAGR and 25% CAGR to INR 126.5 crore (+ 44bps in EBIDTA

margin to 39.2%) and INR 70.4 crore (+151bps in PAT margin to 22%)

respectively. Given its asset light model, return ratios - RoE of 22.1%

and ROCE of 33% are expected to remain elevated

We re-initiate coverage on Byke Hospitality (Byke) with a BUY

recommendation and a Price Objective of ₹351 (target Adj P/E

multiple of 20x) implying upside potential of ~109%. At the CMP of

₹168, the stock is trading at PE of 9.6x FY21E EPS and compares

favorably with peers of similar size.

Sensex 35,178

Nifty 10,684

Industry Hotel

Scrip Details

MktCap (Rs cr) 673

BVPS (Rs cr) 45.8

O/s Shares (Cr) 4.01

52 Week H/L 215/150

Div Yield (%) 0.6

FVPS (`) 10

Shareholding Pattern

Shareholders %

Promoters 46.5

Public 53.5

Total 100.0

Byke vs. Sensex



Our optimism stems from the following

❖ Healthy balance sheet with an asset light model

Instead of buying the properties outright, Byke prefers to lease properties. This

enables Byke to expand its reach by adding more resorts to its portfolio without any

major capital expenditure. Refurbishment costs per room ranges from Rs 5-10 lakhs

depending upon the location & the segment which it is adhering to. Of the 12 resorts

that the company operates as on FY18, 10 are on an operating lease of 10-15 years.

❖ Resorts at strategic locations to fuel growth

Out of the 874 rooms as on FY18, Byke has concentrated its portfolio in few regions

like Mumbai (162 rooms), Matheran (168 rooms), Goa (240 rooms). These 3

locations comprise approx. 65% of the Byke’s FY18 room capacity. Byke has played

its strategy over all the fronts (Business locations - Mumbai, weekend getaways -

Matheran and famous vacation spots - Goa). The Management guides to add new

resorts in the locations which will aid further penetration in the above segments. We

expect the revenues from resort room sales to grow at a CAGR of 28.4% to Rs 130.9

crores in FY21 from 62 crores in FY18.

❖ Pure vegetarian food helps Byke create its own niche

Byke resorts serve only vegetarian cuisine and hence caters primarily to domestic

travellers. Byke’s niche positioning, even in a foreign tourist dominated destinations

such as Goa, helps to capitalize on domestic tourist spending which is expected to

grow at a faster rate. Food and beverages revenue is expected to grow from ₹78.7

crore in FY18 to ₹136.3 crore in FY21 registering a CAGR of 20.1%.

❖ Company’s focus to create its own brand rather than concentrating

on chartering business

Due to increased competition from Make My Trip, Oyo Rooms, Trivago, etc in the

room chartering segment, the Company aims to concentrate on building its own

brand “Byke” in the resort segment. Thus, chartering segment’s contribution to the

total revenue is expected to decline from 21% (restated) in FY17 to 17% in FY21. We

expect the room chartering revenues to increase at a CAGR of 14.4% to 55.1 crores

in FY21 from 36.8 crores reported in FY18 on the back of a 12.3% CAGR in room

sales.

❖ Valuation

We re-initiate the coverage on Byke Hospitality with a BUY recommendation and a

Price Objective of ₹351 (target Adj P/E multiple of 20x FY21E) implying a potential

upside of ~109%. At the CMP of ₹168, the stock is trading at an Adj P/E of 9.6x

FY21E respectively.



❖ Company Background

The Byke Hospitality Ltd. (Byke) incorporated in 1990 is engaged in the ‘midscale’

lease operated hotel business. In FY18, it operated 12 resorts across Maharashtra,

Rajasthan, Goa and Manali with a total bouquet of 874 rooms. While 2 (Byke

Heritage & Byke Brightland, Matheran) of the 12 resorts are owned, the remaining 10

are on an operating lease of 10-15 years.

Byke: Revenue Break Down

Source: Byke, Ventura Research



❖ Key investment highlights

➢ Cyclical nature of the Hotel Industry

Indian Hotel industry after facing headwinds for over a decade is at an inflection

point.

• Following the upcycle of FY2003-08, the hotel industry has been facing a decade of

turmoil.

• The period of FY09-13 was marred by muted occupancy rates & falling ARRs & a

sharp growth in the room supply.

• Hit by the avalanche of excess room supply, the hotel industry underwent a

consolidation phase in FY13-17. This period witnessed moderate room additions and

flattish trend in the ARRs. However, occupancy levels continued to remain muted.

Despite muted demand growth, there has been a structural shift from more luxury

and upper scale rooms to a more balanced supply scenario. Midscale‐Economy

which formed 7.3% of the total supply at the start of the century now contributes

22.6% of the total supply. Top 10 markets, i.e. Mumbai, Delhi NCR, Bengaluru,

Different phases of the hotel industry

Source: Industry, Ventura Research



Kolkata, Chennai, Hyderabad, Pune, Ahmedabad, Jaipur & Goa, form 67.7% of the

total room supply in India.

➢ FY18 onset for greenshoots

FY18 has seen a healthy trend with both the ARRs and occupancies inching up while

the room additions growth has slowed considerably. We believe this to be an

encouraging sign and mark the upturn in the cycle. We are optimistic on a sustained

bull cycle given the following tailwinds:

1) Consolidation on the supply side

2) Increasing demand on the back of following:

• Government initiatives & policies to promote tourism

• Rising per capita income providing impetus to increase in domestic

expenditure towards travel & tourism

• Increase in the foreign tourist arrivals due to improved infrastructure and easy

availability of E-Tourist Visa

➢ Consolidation of supply in the hotel industry

Expected increase in availability of rooms

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Room Composition in India

Source: IBEF, Ventura Research



It is evident from the above data that proposed supply as a percentage of existing

supply is expected to increase only at 6.9% CAGR till FY22E resulting in consolidation

in the hotel industry.

Bulk of this room additions is expected to come in the budget and mid-market

segment. With overall demand expected to outstrip supply, the hotel industry finds

itself is in an extremely sweet spot where both occupancies and ARRs are expected

to improve significantly.

➢ Rising Per capita Income & Domestic Expenditure on Tourism

Domestic expenditure on tourism after bottoming out in CY15 (CY10-15 CAGR

6.5%) has started to build on the aggressive two years CY15-17 (CAGR 40%) and is

expected to grow at a 7% CAGR over the next 10 years to $ 383.1 bn by CY27. Per

capita income too is expected to increase at a CAGR of 9 per cent over 2016-2027

from $1747.5 in CY2016 to $4515 in CY27.

Expected increase in availability of rooms




From the below chart, we can interpret that the per capita spend towards

discretionary expenditure has increased from 32% in FY1990-2005 to 43% in FY06-

16 which is further expected to increase up to 49.5% in FY17-25.

Further significant changes in consumer behavior due to rising disposable income,

popularizing weekend culture, the eagerness to spend amongst the youth and other

factors like government campaigns, introduction of low-cost airline services,

Per Capita Income

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Per Capital Income In India

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Source: Ministry of Tourism, IBEF, Ventura Research

Domestic Expenditure on Tourism

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Discretionary Spend set to improve significantly

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Apparel Housing Health F&B Education Discretionary

Source: World Bank Database, Ventura Research



increased trade and booming service sector are expected to provide impetus to the

domestic spend on tourism.

➢ Government Initiatives and Policies providing impetus to the industry

• Swadesh Darshan

Based on specific themes, government has identified 13 circuits which includes:

1) Krishna Circuit

2) Buddhist Circuit

3) Himalayan Circuit

4) North East Circuit

5) Coastal Circuit.

Under Budget 2018-19, the government allotted INR1100 crore (approx.) for

Integrated development of tourist circuits under Swadesh Darshan scheme.

• National Tourism Policy 2015

National Tourism Policy 2015 has been formulated that would encourage the citizens

of India to explore the country as well as position the country as a ‘Must See’

destination for global travellers.

Under Union Budget 2018-19, INR115 crore was allocated for promotion & publicity

of various programmes & schemes of the Tourism ministry.

• Tax Incentives

An investment-linked deduction under Section 35 AD of the Income Tax Act is in

place for establishing new hotels in the 2-star category and above across India, thus

permitting a 100 per cent deduction in respect of the whole or any expenditure of a

capital nature.

• 100 percent FDI ownership has fueled investment in the sector

100 per cent FDI is allowed under the automatic route in tourism & hospitality, in

tourism construction projects, including the development of hotels, resorts &

recreational facilities.

Hotel & Tourism sector has received cumulative FDI inflows of INR69,000 crore from

April 2000 to September 2017. International hotel brands are targeting India e.g.

Carlson group is aiming to increase the number of its hotels in India to 170 by 2020.

Hospitality majors are entering into tie ups to penetrate deeper into the market, such

as Taj & Shangri-La entered into a strategic alliance to improve their reach & market



share by launching loyalty programmes aimed at integrating rewarded customers of

both hotels

➢ E-tourist visa to promote Foreign Tourist Arrivals

The growth in Foreign tourist arrivals (FTA) is backed by various Government of

India (GoI) initiatives such as introduction of e-tourist visa, developed rail & road

infrastructure, along with promotion of medical and cruise tourism. Since April 2017,

the e-tourist visa has been made available to citizen of 161 countries. The Visa on

Arrival scheme along with E-Tourist Visa schemes have led to attract additional

foreign tourists resulting in a CAGR of 7% from CY07-17. Also, the Indian

government has released a fresh category of visa – the medical visa or M visa, to

encourage medical tourism in India. The foreign earnings from tourism has grown at

~9% CAGR from CY10-17E backed by the increase in FTAs as well as surge in the

individual tourist expenditure

The FTAs are expected to grow at a CAGR of 7% to reach a level of 20 million by

CY27 driven by

1) Increasing international trade

2) Multinational companies setting up their operations in India

3) Strong share of India in the global IT/ITeS sector

4) Increasing number of airports and airline connectivity with all prominent locations

across the globe and

5) Increasing tourism campaigns by the Government of India both at the

central and state level.

Foreign Tourist Arrivals

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Foreign Earnings from Tourism

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The availability of rooms in all the segments of the hotel industry has grown at a

CAGR of 10.4% in the period FY2003-FY2017 and on the other hand demand for the

rooms has grown at a CAGR of 11.5% during the same period. Moving forward, the

supply is expected to grow at a CAGR of 6.9%, which gives us comfort of no major

impending supply side disruption (leading to oversupply) at an overall level.

Occupancy rates are expected to rise to 75% in FY22 from 66% in FY17. Thus, the

total demand is expected to rise at ~9% CAGR backed by 2.6% CAGR in occupancy

rates & 6.9% CAGR in supply. This demand when supported by ARR growth of ~3%

will result in improving the revenues of the hotel industry by ~12-13%

➢ Why Byke Hospitality?

Though the industry witnessed muted growth during FY13-17, Byke’s revenue

increased at ~28% CAGR to INR 270 crore due to the various USPs enjoyed by the

Company. Further EBTIDA & PAT margins also grew 1700 bps & 800 bps to 23.1%

& 12% respectively in FY13 given its asset light model and the corresponding

operating leverage.

We expect Byke to sustain the past performance, backed by the upcycle in the hotel

industry increasing its revenue at 22% CAGR during FY18-21E. Despite the

aggressive room expansion, we expect the occupancy rates to increase from 65% in

FY17 to 71% in FY21E leading to better operating leverage and resultant higher

margins (+ 44bps in Ebidta margin to 39.2%) and (+151bps in PAT margin to 22%)

We expect Byke Hospitality to be one of the major beneficiaries of the hotel industry

upcycle due to the following tailwinds:

Revenue, EBTIDA Margin & PAT Margin trends

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FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19E FY20E FY21E

Revenue EBTIDA Margin PAT Margin

(in cr) (in%)

Margins declined due to increase in lease rent cost (massive room expansion) and interest cost

Due to restatement, only gross profits of the chartering revenue are included in the total revenue




1) Aggressive expansion planned without major capex due to the asset light model

followed by the Company

2) Strategic locations covering both - business & vacation spots, resulting in higher

occupancy rates

3) Through pure vegetarian restaurants Byke has created its own niche, benefiting

from the rise in the number of domestic travellers as well as the overall domestic

spend on tourism

4) Company’s focus on building its own brand rather than concentrating on the

chartering business

➢ Healthy balance sheet with an asset light business model

Byke earns revenues primarily through two sources:

• Resort revenues and

• Room chartering

Both these revenue channels are asset light and have helped Byke maintain a

healthy balance sheet. As of FY17, the company’s debt to equity is far lower than its

larger sized peers who have undertaken debt funded expansions in the recent past.

Despite revenues growing at a robust 20% CAGR during FY14-FY17, the company’s

D/E has decreased from 0.14 in FY14 to 0.04x as of FY17

Instead of buying properties outrightly, Byke prefers to lease properties. Revenues

from resort comprised 79% of the total revenues in FY18. Of the 12 resorts that the

company currently manages, 10 are on an operating lease of 10-15 years. The lease

cost for any resort, on an average, forms 8-10% of the resort sales. Additional spend

is towards modernization and renovation of the acquired properties, which has

helped it to increase occupancies and ARRs post acquisition. The spend per room

varies between 5-10 lakhs depending upon the location & the segment that it is

adhering to

D/E better than the peers




➢ Resorts at strategic locations to fuel growth

From a resort presence in only 2 locations i.e. in Goa and Matheran, Byke has not

only strengthened its presence in these two geographies but also expanded its

footprint in popular tourist destinations such as Shimla, Manali, Rajasthan & Mumbai.

Byke operates 12 properties with a combined room capacity of 874 rooms in FY18.

As of today, Byke has added one more property on long term lease – ‘Byke

Signature’ in Bangalore with a room capacity of 36 rooms, 1 restaurant & 1

conference hall. We also expect the nonoperational properties in FY18 to be

operational by FY19. The fact that over the past one-year Byke has added ~141

rooms, indicates the aggressive expansion plans of the Management.

Properties Exited

While the company is adding new resorts, it is not planning to renew the lease of The

Byke Hidden Paradise in Goa. The Byke Hidden Paradise & Byke Sunflower (owned)

were relatively small sized resorts with 40 & 22 rooms respectively, which did not fare

well with the brand image of “Byke” and considering the small size with no availability

of banquets & gardens they had limited scope for growth. In FY16, both the resorts

contributed to 1.9% of the total revenues. In our opinion, we do not believe the

Byke’s Hotel portfolio




discontinuance of the operations at both the resorts will have any material financial

implication for the company.

The rapid pace of room additions helped the company clock a robust revenue growth

of nearly 20% CAGR from FY14-FY17. With upcoming resorts in Lonavala,

Mahabaleshwar, Chandigarh, Dalhousie, Darjeeling, Gangtok, etc we believe that the

company is well diversified in terms of geographic presence

Based on management guidance, we expect the room capacity to increase from 874

rooms in FY18 to 1359 rooms in FY21E registering a CAGR of 16.7%. Average

occupancy is expected to increase significantly from 68% in FY18 to 71% in FY21

and the average room rent to increase from INR 3867 in FY18 to Rs 4390.9 in FY21

registering a CAGR of 4.3%.

Byke’s Resort Locations

©




We expect the total revenues from resort room sales to grow at a CAGR of 28.4% to

Rs 130.9 crores in FY21 from 62 crores in FY18. The growth can be attributed to high

growth in the industry, structural shift from the luxury segments to the mid-budget and

value segments, focus on expanding the rooms at strategic locations while

maintaining the higher occupancy rates and ARRs

ARRs and Occupancy to increase steadily

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Average Room Rent Average Occupancy

(in %) (in ₹)


Robust room expansion to continue

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Leased Rooms Owned Rooms




Strategic locations of properties provide stable revenue streams

Out of the 874 rooms as on FY18, Byke has concentrated its portfolio in few regions

like Mumbai (162 rooms), Matheran (168 rooms), Goa (240 rooms). These 3

locations comprise approx. 65% of the Byke’s FY18 room capacity. Byke has played

its strategy over all the fronts (Business locations, weekend getaways and famous

vacation spots).

• Business travel segment on a rise

Also, since FY05 the share of business travellers vis-à-vis leisure travellers has

increased from 59.8% to 63% in FY16 & Byke with 2 ready properties (Byke Suraj

Plaza – 122 rooms, Byke Deletol – 40 rooms) is well placed to cater to this segment.

With Byke Signature (Bangalore) & plans to add a new resort in Chandigarh,

management intends to cater to the changing trend in favour of the business

travellers.

Resort revenues to grow at a CAGR of 28.4%

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(in cr) (in %)


Share of Business & Leisure Travellers

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Source:Ventura Research



To cover the weekend getaway space, Byke has 3 resorts in Matheran, which is just

80 kms away from Mumbai, namely: Byke Heritage (80 rooms), Byke Redwood (25

rooms) and Byke Brightland (63 rooms). Soon Lonavala & Mahabaleshwar are

expected to be operational.

With the new resorts expected to be leased in destinations like Dalhousie,

Darjeeling, Gangtok, Jodhpur, etc, the Management is focusing on diversifying its

portfolio to establish a pan India presence in the vacation space as well

Also, Byke has played its field very well by choosing locations where the average

occupancy rates for the industry have been relatively high historically like Mumbai

(71%), Goa (69%), Jaipur (62%), Shimla-Manali (59%).

➢ Pure vegetarian food helps Byke create its own niche

Byke resorts serve only vegetarian cuisine and hence cater to primarily domestic

travellers. Byke’s niche positioning, even in a foreign tourist dominated destinations

such as Goa, helps to capitalize on domestic tourist spending which is expected to

grow at a faster rate. Food and beverages revenue is expected to grow from ₹78.7

crore in FY18 to ₹136.3 crore in FY21 registering a CAGR of 20.1%. As the growth is

subdued when compared to the resort room revenues, its contribution to the total

hotel revenues is expected to be lowered from 44% in FY18 to 42% in FY21.

The share of tourists is highly skewed in India towards the domestic travellers vis-à-

vis the foreign travellers. The share of domestic travellers in India has improved from

76.9% in FY05 to 81.5% in FY16 while on the other hand, share of foreign travellers

has reduced from 23.1% in FY05 to 18.5% in FY16. The trend is expected to strongly

sustain given the high growth in per capita income of India vis-à-vis other countries

and increased domestic spend on tourism.

Share of Domestic & Foreign Travellers

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Domestic Travelers Foreign Travelers

Source: Ventura Research



➢ Room Chartering – High on margins and scalability, yet low on capital

The company started its room chartering business in FY11. Under room chartering,

Byke purchases room nights of mid-budget hotels in bulk across religious and leisure

tourist destinations during the off-peak season and sells them during the peak-

season.

Since the past, it has managed to sell ~95% of the room nights purchased at a gross

margin of 25%. In FY18, the company clocked revenues of Rs 141 crores, which is

expected to reach Rs 212 crores in FY21. Post GST implementation, the company

has started reporting room chartering revenues net of direct cost (i.e only the gross

profits in the total revenue from FY18).

We expect the room chartering revenues to increase at a CAGR of 14.4% to 55.1

crores in FY21 from 36.8 crores reported in FY18. The number of rooms sold are

expected to increase from 6,38,000 in FY18 to 9,04,275 in FY21 registering a

CAGR of 12.3%.

Due to increased competition from Make My Trip, Oyo Rooms, Trivago, etc in the

room chartering segment, Byke aims to concentrate on building its own brand

“Byke” in the resort segment. Thus, chartering segment’s contribution to the total

revenue is expected to decline from 21% (restated) in FY17 to 17% in FY21.

Chartering Revenue to grow modestly

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(in cr)Due to restatement , only gross profits are included in the revenue




➢ Revenue and its components

Though FY18 has been a muted year for the hotel industry, it seems that the worst is

over, and the industry is at an inflection point which is obvious from the robust growth

in both the ARRs and occupancy rates. The dip in the growth in FY18 is mainly due

to the restatement in the chartering segment implemented by the company and due

to the pains experienced by the industry as a whole. Thus, the revenue is expected

to grow from ₹177.3 crore in FY18 to ₹322.3 crore in FY21 registering a CAGR of

22%

Number of rooms sold under chartering

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Chartering Rooms Sold

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Robust revenue growth on the crads

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(in cr) (in %)Due to restatement, only gross profits of chartering business are included in the revenue




Due to the restatement, the share of chartering business in the total revenue has

reduced from 51% in FY17 to 21% in FY18 (restated). This has also resulted in

optically high debtor days as the revenue recognition of chartering service is now

being shown net of expense. Further its share is expected to reduce to 17% in FY21

due to a shift in the Company’s focus to develop its own brand. Likewise, the share

of food & beverages is expected to reduce from 44% in FY18 to 42% in FY21. The

share lost by food & beverages and chartering segment is expected to be gained by

resort room segment which will grow its share from 35% in FY18 to 41% in FY21.

Room occupancies to spearhead revenues

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❖ Financial Performance

In Q4FY18, Byke Hospitality reported a growth of 12% in topline to Rs 55.9 crore

from Rs 50 crore in the same quarter of the previous year. The EBITDA margin

increased by 290 bps to 39.3% from 36.4% mainly due to the increase of F&B share

in the hotel revenues and operating leverage enjoyed by the Company. The PAT

stood at 11.9 crore increasing 33.7% YoY.

During FY18, Byke Hospitality reported net sales of Rs 177.4 crore registering a

growth of 7% YoY. The EBITDA margin increased by 130 bps YoY to 38.7% and the

PAT increased by 12.5% YoY to Rs 36 crore.

Financial Performance (Rs in crore)

Description Q4FY18 Q4FY17 FY18 FY17

Profit & Loss

Revenue 55.9 50.0 177.4 166.4

Growth (%) 12% 7%

Total Expenditure 33.9 31.8 108.7 104.2

% of Sales 60.7% 63.6% 61.3% 62.6%

Ebitda 22.0 18.2 68.7 62.2

Ebitda Margin 39.3% 36.4% 38.7% 37.4%

Other Income 0.2 0.2 0.8 0.7

PBDIT 22.2 18.3 69.5 62.8

Interest 0.2 0.2 0.8 1.1

Depreciation 3.9 4.4 13.7 12.8

Exceptional Items 0.0 0.0 0.0 0.0

PBT 18.1 13.7 55.1 49.0

PBT Margin(%) 32.5% 27.3% 31.0% 29.4%

Tax 6.3 4.7 19.1 16.9

PAT 11.9 8.9 36.0 32.0

PAT Margin (%) 21.2% 17.9% 20.3% 19.2%

(The figures of FY17 have been restated as the Company includes only the gross profits of Chartering Business from FY18)




➢ EBITDA & PAT Margins have shown an uptick in FY18 due to restatement of the

financials in FY18 whereby only the gross profits of the chartering business will be

shown in the total revenue. D/E ratio is expected to improve going forward from

0.11 in FY18 to 0.03 in FY21E as there are no plans to purchase/construct any

new hotel and the maintenance capex could be managed from the internal

accruals. Further, due to muted FY18 earnings, ROE fell from 23.5% in FY17 to

21.7% in FY18 which is expected to increase marginally by 40bps to 22.1% by

FY21E. Asset T/O fell from 2.94 in FY17 to 1.72 in FY18 mainly due to

restatement and is expected to improve to 1.87 in FY21E

EBITDA & EBITDA Margin

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PAT & PAT Margin

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Asset T/O expanding given the asset light business

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2.00

2.50

3.00

3.50


Asset Turnover

(in %)Due to restatement , only gross profits are included in the revenue


D/E low, stable ROE

-

5.0

10.0

15.0

20.0

25.0

30.0

0.00

0.02

0.04

0.06

0.08

0.10

0.12

0.14

0.16


D/E ROE

(in %)




❖ Valuation

We re-initiate coverage on Byke as a BUY with a price objective of Rs 351

representing a potential upside of ~109% over a period of 24-30 months. We

have used the price multiple approach to value Byke. We have assigned a PE of

20x on FY21 EPS of Rs 17.6 to arrive at the target price. The assigned PE of 20x

is at a ~40% discount to Byke’s 5-year median multiple of 33x. We are positive

on the company given the:

i) Robust, asset light and debt free business model

ii) Encouraging prospects of the hotel and tourism sector in India

P/Bv


EV/Ebitda


P/E




❖ Peer Comparison

Peer Comparison

________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

Source: Byke,Ventura research



❖ Financials & Projections



Disclosures and Disclaimer

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You should not regard the inclusion of the projections and forecasts described herein as a representation or warranty by VSL, its associates, the authors of this report or any other person that these projections or forecasts or their underlying assumptions will be achieved. For these reasons, you should only consider the projections and forecasts described in this report after carefully evaluating all of the information in this report, including the assumptions underlying such projections and forecasts. The price and value of the investments referred to in this document/material and the income from them may go down as well as up, and investors may realize losses on any investments. Past performance is not a guide for future performance. Future returns are not guaranteed and a loss of original capital may occur. Actual results may differ materially from those set forth in projections. Forward-looking statements are not predictions and may be subject to change without notice. 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byke hospitality limited buy...its strategy over all the fronts (business locations - mumbai,...

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