27 JUNE 2016
SECTOR: OTHER
The Byke Hospitality
BSE SENSEX
26403
S&P CNX
8095
(INR CRORES)
CMP: INR157 TP: INR215 (+37%)
Buy
Y/E MARCH
Revenue
EBITDA
EBITDA Margin
NP (Adj.)
EPS (Adj.)
EPS Growth
BV/share
Core ROE (%)
Core ROCE (%)
P/E (x)
P/BV (x)
FY16
232
53
22.7%
26
6.5
29%
30
23
33
24.2
5.2
FY17E
280
64
23.0%
34
8.4
30%
37
25
35
18.7
4.3
FY18E
346
80
23.2%
43
10.7
28%
45
26
37
14.6
3.5
We recommend to BUY The Byke Hospitality for a target of
INR 215 - 20x on FY18E EPS (+28% Upside).
Unique and asset-light model business model:
The company
operates 9 of the company's 11 properties are on long-term leases (it
leases out promising 2-3 star properties in popular tourist destinations).
In absence of track records, non-branded (single hotel players) hotels
face issues in running their businesses. Byke leases hotels and address
these challenges on back of their management experience, strong track
record, marketing and distribution network, which further leads to higher
occupancy, thereby maximizing the company's profitability. Byke also
focuses on the MICE category (meetings, incentives, conferencing,
and exhibitions), earning sizeable revenues from F&B and banqueting
at its hotels, thereby boosting room revenues.
Strong growth in chartering business to drive overall revenue:
Byke is also a sizeable aggregator of rooms in the mid?market/economy
segment hotels on a pan-India basis. The company purchases peak
season room inventory (three months in advance by paying 85% of
the money upfront) at a significant discount from hotel owners largely
in northern and western India, and leverages the pan India network of
326 agents (covering about 66 cities) to successfully sell them. In
FY16, the company achieved an average occupancy level of 94% in
the chartering business. The chartering model helps the company helps
in gaining insight on tourist trends - key for selection of hotel properties.
The chartering business has grown at 46% CAGR over FY12-16 and
formed 51% of total revenues of FY16.
Expansion holds promise:
In the leased business, room portfolio
(currently 677 rooms across 9 properties) has grown at 30% CAGR
over FY11-16. The company has envisaged the addition of 450-500
rooms over FY17-18 through the addition of properties in eight tourist
destinations across the country. The management is also looking to
expand its room-aggregation business, which enjoys steady profitability
and healthy cash churn with low capital risk.
Valuations & View:
Byke trades at an FY18 PE of 14.6x and EV/
EBIDTA of 8.1x. An asset-light business model, adequately capitalized
balance sheet, robust cash flows, exciting growth prospects, & a
capable management inspire confidence in its prospects over the next
two years. We initiate coverage with a Buy recommendation and price
target of INR 215 based on 20x our FY18 EPS estimate of INR 10.7.
We believe the premium valuation (compared with peers ) is justified
because of Byke's superior return ratios and track record.
KEY FINANCIALS
Diluted Shares (cr)
Market Cap. (INRcr)
Market Cap. (US$ m)
Past 3 yrs Sales Growth (%)
Past 3 yrs NP Growth (%)
4.0
630
94
34%
61%
STOCK DATA
52-W High/Low Range (INR)
Major Shareholders (as of May 25, 2016)
Promoter
Institutions
Public & Others
Average Daily Turnover(6 months)
Volume
Value (INRcr)
1/6/12 Month Rel. Performance (%)
1/6/12 Month Abs. Performance (%)
182/148
44.5
14.3
41.3
126946
2.0
-11/1/-4
-7/3/-9
Maximum Buy Price :INR 180
Dharmesh Kant
(Dharmesh.Kant@motilaloswal.com); Tel: +91 22 30102470 (Earlier
Covered by: Ravi Shenoy)
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.

The Byke Hospitality
Track record inspires confidence:
The company has delivered a CAGR of 47% in revenues since FY11,
with room inventory and metrics like ARR and OR registering continuous growth. With EBITDA/PAT delivering
a CAGR of 68/63% since FY11, its margins and cash flows have improved through a focus on costs and tight
control over working capital. It does not have much debt and its asset-light strategy has ensured strong return
ratios.
Robust balance sheet:
The company has relatively low level of debt (INR 9.7cr) on its balance sheet (Net
D/E: 0.1x). This leaves significant headroom for the company for its expansion plans for the leased business,
with a majority of capex to be funded through internal accruals. The company expects to spend ~INR 40-45cr
for this plan. Further, the growth in its room chartering business would be met from internal accruals with a
possibility of borrowing only to meet the mismatch in cash flows
CONCERNS
Online aggregators:
Increase in competition from online companies like Oyo Rooms could impact Byke's
growth in the long term.
Execution risk:
Slower pace in addition of leased properties could impact the earnings of the company.
Slowdown in Indian economy:
Slowdown in Indian economy could impact spending in this segment.
BACKGROUND
Byke Hospitality Ltd (Byke) is an India based hospitality services company. The company has two business
segments - 1) managing properties/hotels and 2) room chartering. The company operates 11 resorts across
Maharashtra, Rajasthan, Goa and Himachal Pradesh (Manali) with a total bouquet of 677 rooms. It operates
primarily on a lease based model. While 2 of the 11 resorts are owned, the remaining 9 are on an operating
lease of 10-15 years. Under the room chartering business, the company manages room inventory at various
locations. The company books third-party hotel rooms at strategically identified cultural and religious tourist
destinations during peak seasons, on a bulk basis, and lets them out to tourists. It is also under the process of
developing a travel portal - tripdeal.com - which will facilitate travel and room booking online and help bolster
Byke's room chartering business.
INR Cr.
Total Income
Expenditure
EBITDA
Other Income
Interest
Depreciation
PBT
Tax
P\L of Associates
Adj. PAT
EBITDA (%)
Tax rate (%)
4QFY15
57
44
12.5
0
0
3
9.1
2
0
7.2
21.90%
21%
3QFY16
70
53
16.6
0
0
2.4
13.9
5
0
9
23.70%
35%
4QFY16
68
52
16.2
0
0
4.6
11.2
4
0
7.4
23.80%
34%
2%
-19%
-19%
52%
23%
8%
90%
-19%
yoy
19%
17%
29%
qoq
-3%
-3%
-2%
4Q FY16:
Hotel revenues grew +18.5% YoY, chartering revenues grew +20.6% YoY.
The company added the 122 room Thane property to its leased portfolio in September 2015. This hotel will
bring in revenues going forward.
Depreciation came in at INR 4.6cr (up 52% YoY) as the company added two new properties at Thane and
Puri.
27 June 2016
2

The Byke Hospitality
IVRCL: Financials and Valuation
The Byke Hospitality Financials & Valuation
INCOME STATEMENT
Y/E MARCH
FY14
FY15
(INRCR)
FY16 FY17E FY18E
RATIOS
Y/E MARCH
FY14
FY15
FY16 FY17E FY18E
Net sales
Growth
COGS
Employee Cost
Other Expenses
EBITDA
EBITDA Margin
Depreciation
Other Income
Interest Cost
PBT
- TAX
Rate
Adjusted PAT
Growth
PAT Margin
156
181
232 280
346
54% 17% 28% 21% 24%
9
14
18
21
26
3
4
6
7
8
0
0
0
0
0
29
37
53
64
80
18.3% 20.5% 22.7% 23.0% 23.2%
5
10
12
12
14
0
0
0
1
1
2
2
1
1
1
21
25
40
52
66
5
5
14
18
23
25% 21% 34.6% 35.0% 35.0%
16
105%
20
26%
26
29%
34
30%
43
28%
Adjusted EPS (INR)
Book Value
Div Per Share
Dividend Payout
Net Debt / Equity
P/E
P/BV
Dividend Yield
ROCE
ROE
Debtor days
Inventory days
Creditor days
Loans & advances days
W.Cap cycle
4.0
42
1.5
38%
0.1
39.6
3.7
1.0%
23%
20%
25
14
51
44
32
5.0
25
1.0
20%
0.1
31.4
6.3
0.6%
25%
22%
28
12
40
52
53
6.5
30
1.3
20%
0.1
24.2
5.2
0.8%
33%
23%
28
10
34
55
59
8.4
37
1.7
20%
0.0
18.7
4.3
1.1%
35%
25%
30
10
37
55
57
10.7
45
2.1
20%
0.0
14.6
3.5
1.4%
37%
26%
30
10
37
55
57
10.2% 11.1% 11.2% 12.0% 12.4%
(INRCR)
FY14
FY15
FY16 FY17E FY18E
BALANCE SHEET
Y/E MARCH
CASH FLOW
(INRCR)
FY14
FY15
FY16 FY17E FY18E
Y/E MARCH
Share Capital
Reserves
Networth
20
65
85
40
60
100
0
10
5
0
115
79
2
0
6
14
2
26
0
0
48
21
27
7
115
40
81
121
0
10
5
0
136
88
0
0
6
18
3
35
0
0
62
23
39
10
136
40
107
147
0
10
5
0
162
90
0
0
8
23
14
42
0
0
87
22
64
7
162
40
140
180
0
10
5
0
195
90
18
0
9
28
18
52
0
0
108
27
80
7
195
Minority interest
0
Loans
12
Less Net Def. Tax Liab
5
Less other long term liability 0
SOURCES OF FUNDS
102
Net Fixed Assets
Capital WIP
Goodwill
Inventories
Debtors
Cash & Investments
Loans & Advances
Other Curr Assets
Current investments
Curr. Assets
Creditors and Prov.
Net Current Assets
Other LT assets
APPLICATION OF FUNDS
78
4
0
6
11
2
19
0
0
38
23
14
6
102
PBT
Adjustments
(Inc)/Dec in W.Cap
Others
Pre Tax OCF
Tax Paid
CF from Operations
(Inc)/Dec in FA
Net investments
Others
CF from Investing act.
Equity issuance
Inc/(Dec) in Debt
Interest Paid
Divd Paid (incl Tax)
Others
CF from Financing act.
Inc/(Dec) in Cash
Add: Opening Balance
Closing Balance
21
8
2
(5)
25
(5)
20
(9)
0
0
(9)
0
(7)
(2)
(4)
2
(11)
0
1
2
25
12
(14)
(2)
22
(5)
16
(9)
0
0
(9)
20
(2)
(2)
(5)
(19)
(8)
(0)
2
2
40
13
(14)
0
39
(14)
25
(16)
0
0
(16)
0
(0)
(2)
(6)
0
(8)
1
2
3
52
12
(12)
0
52
(18)
34
(14)
0
1
(13)
0
(0)
(1)
(8)
(1)
(10)
11
3
14
66
13
(12)
0
67
(23)
44
(32)
0
1
(31)
0
(0)
(1)
(10)
2
(9)
4
14
18
27 June 2016
3

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