In challenging external business conditions, Northern Arc has delivered an excellent set of numbers. Gross NPA’s have risen marginally from 0.47% to 0.6%. However, what is heartening to see is that the company has consciously decreased the MFI book from 23% as of March ’24 to sub 20% now.Also NIM’s are stable at 9.1% and cost of funds have declined from 9.3% to 8.9%.
With 65% of the borrowings floating in nature, the company seems well positioned to benefit from the anticipated lower interest environment in the future.
On the asset front, around 35% to 40% of the total assets are floating, linked to the internal benchmark rates subject to the interest rate sensitivity, which should give a fillip to the NIM’s going forward. At a trailing P/B of 1.2 times, it could be a strong rerating candidate going forward.
D: Invested.

Kamat Hotels –

Q2 results and concall highlights –

Revenues – 85 vs 64 cr, up 33 pc
EBITDA – 22.5 vs 18.7 cr, up 20 pc ( margins @ 27 vs 29 pc )
PAT – 8.3 vs 0.03 cr ( due to sharp fall in interest costs – due repayment of loans )

Current portfolio of Hotels ( all hotels are leased except 02 which are owned and 01 on management contract ) –

Under Orchid brand –
Pune – 410 rooms
Mumbai – 372 rooms ( Owned )
Shimla – 96 rooms
Manali – 47 rooms
Goa – 48 rooms ( Owned )
Lonavala – 36 rooms ( management contract )
Jamnagar – 45 rooms
Toyam ( Pune ) – 21 rooms

Under IRA brand –

Mumbai – 195 rooms
Bhuvneshwar – 111 rooms
Nahsik – 31 rooms
Sambhaji Nagar – 33 rooms
Ayodhya – 49 rooms

Lotus Resort Murund – 40 rooms
Fort Jadhavgarh Pune – 58 rooms
Madhodhani Palace Puri – 33 rooms

At present – capex ( addition of rooms / facilities ) and renovation work is on at Orchid – Pune and Goa

Upcoming properties –

Under Orchid brand @ Chandigarh, Dehradun, Gwalior and Puri

Under IRA brand @ Bhavnagar, Hyderabad and Noida

Most of these properties are likely to open up in calendar year 2025

Aim to keep upgrading / renovating 2 properties each year

Current debt on books @ 120 cr with RoI of 10.5 pc

Expecting to maintain EBITDA margins in H2 – at levels similar to Q2 – due increased manpower and energy costs

Expecting to clock revenues of around 350 cr for FY 25 with full FY 25 EBITDA > 90 cr

37 pc of company’s business comes from repeat customers ( which is a very healthy number ). As the company expands its number of properties, this percentage should increase going forward

IRA Noida is opening on 07 Nov 24

Company expects their finance cost to be between 6-7 cr for Q2 – this should be a key positive and bump up the PAT in Q2

Revenue target for FY 26 stands at 400 cr

Disc: holding, biased, not SEBI registered, not a buy/sell recommendation