The Success Equation: Untangling Skill and Luck | Michael Mauboussin | Talks at Google

Sharing the concall notes:

• Management is expecting EBITDA margins to remain same as Q2 going forwards. Note: This is in conflict with their expected revenue and EBITDA guidance. Not sure if any of these guys have heard of Excel

• Their target is to become net debt positive by FY25 end. EBITDA + cash > debt

• Revenue growth is primarily in the room segment, F&B has not contributed much

• Their hotel in Noida is expected to give good revenue as the location has plenty of MNCs like Google, Microsoft and hotel market has a big vacuum

• Targeting EBITDA of ~100 Cr in FY25. The promoter has mentioned ~90 Cr earlier but then the CFO chimed in and said 100 Cr. Not sure why this information is not known to the promoter previously

• 7 Cr interest in next 6 months. Note: Honestly, I have given up on understanding how their interest costs are structured.

• They mentioned debt of 120 Cr @10.5% interest but they had mentioned the interest rate @10.75% in previous ppts and concall. Felt these numbers were given a little casually and makes me doubt on their other numbers

• Tax costs of 2.5-3 Cr in next 6 months to be incurred with a 2 Cr tax refund expected. The CFO was again fumbling in the background with these numbers

• Growth guidance: 400 Cr has now been reduced to 350 Cr in their ppt, they didn’t mention this in the concall by themselves.

• Reason for margins having reduced from 30% to 18% in Q1 and 26% in Q2

  • Orchid, Dehradun and Chandigarh got delayed and expected to open in late FY25 or FY26
  • Election and heat affected us too much. Earlier, he said electricity costs have increased (how?!)

• Long-term outlook:

  • Company is planning for sustainable growth without taking on too many risks or expensive lease rentals
  • Company wants to open hotels in niche location as they feel that domestic tourism is stagnating

• Rough valuation math:
  

• The stock is cheaply available and there is a reason for that but the risk-reward is still favorable as H2 is expected to be much better. Although I feel the expected margins seem unlikely

• Also, the interest and tax numbers were given by the CFO and well, my trust in her is a little lacking