Hi …

I am reasonably sure that the total debt figure for the company ( Kamat Hotels ) at the end of FY 25 is around that 175 cr mark

Can’t comment on the screener’s data

Is there any value creation in their demerger? if any one is tracking, please share your view on it

My notes based on FY24 results:

1. Revenues have finally reached back to FY18 levels (Rs 333 Cr). FY19 was when stock was severly derated, and severe de-growth in the business, post IL&FS fiasco.
2. Expenses have doubled (220 Cr) since FY18 primarily because of increasd employee expenses. So, with same revenues in FY24 (as of FY18), and doubling of expenses, the profitability has taken a hit (compared with the base of FY18).
3. Growth is difficult to come across industry during last 5 years (including CRISIL & ICRA), which has been contrary to my view, which was that growth will come with credit growth in
   across time.
4. Management remains sub par majorly from capital allocation perspective (my views), as they had to be asked many times to do a buyback when stock price was depressed.

Also, I am not sure what they will do with 600 Cr cash holding in their balance sheet since ages, without any need of capital in the business (Off topic but same thing applies in asset management companies (UTI AMC, HDFC AMC) which holds ton of cash without any need in the business).

This experience taught me that cash cannot be valued at face value in any business. I know it in theory, but knowing is not doing as experience is the best teacher.

Dsiclosure – Invested.

Growth prospects data center industry in India

Data center industry is promising based on following several key factors:

1. Demand Outlook:

Digital Transformation: India’s transition to a developed market economy is driven by digital transformation, accelerating economic growth and big data production. Due to Continuous expansion of e-commerce, fintech platforms, gaming & online streaming services will increase internet penetration, which is expected to reach 87% in FY29. The introduction of tech such as 5G, IoT and AI is expected to increase significantly and the demand for data will accelerate the growth of data centers industry.

Internet Penetration as on FY23:

2. Lower Per MW Costs:

In India there is cost advantages for setting up of data centers because of relatively lower land and labor costs. The capex required to set up a data center in India is about 45% lower than the global average.

3. Government Incentives and Regulatory Measures:

Central and State Governments provide incentives such as infrastructure space, credit lines, power subsidies and regulatory support for data localization. Actions such as Draft Data Center Policy 2020 and Infrastructure focus in the Union Budget 2022-2023 will encourage investments and economic growth.

4. Growth potential and proposed investments:

Data center capacity in India is expected to double to around 2000 MW by 2026, requiring an investment of Rs. 50,000 crores over the next three years. The capacity of the industry has increased rapidly and it was predicted to reach almost 900 MW by 2023, and the growth rate is about 100-150 MW per year.

Revenue growth of data center operator was approximately 24% CAGR from FY17 to FY23. Now, it is expected to continue at a CAGR of 32% from 2024-2026. EBITDA margins was stable at around 43% in FY 2022-23, and they should remain stable for the next 2-3 years as well.

Key Capex Metrics:

1. Land & construction:

About 40% allocation of the capex is required for land acquisition and building construction, including fit-outs.

2. Power system:

Another 40% of investment is required to be allocated to the power system, including power infrastructure, distribution systems and backup energy sources such as generators and UPS systems (uninterruptible power supply).

3. Heating, Ventilation and Cooling (HVAC):

The remaining 20% ​​of the cost is spent on the heating, ventilation and cooling system, which is critical to maintaining the optimal operating temperature of the data center. In addition, the cost of setting up a data center will also be affected by regulations regarding scalability, design and location.

Key operating cost metrics:

• Energy consumption: represents approximately 65% ​​of total operating costs, including electricity used in IT equipment and cooling systems.

• Cooling system costs: necessary to maintain the optimal operating temperature of the data center.

• IT equipment maintenance costs: includes maintenance and service costs for servers, network equipment and storage systems.

• Personnel Costs: The cost of hiring and maintaining personnel, including network engineers, system administrators, and security personnel.

• Security and compliance costs: includes implementing and maintaining security measures and ensuring regulatory compliance.

• Property and Facility Maintenance Costs: Includes renting or owning a facility, maintenance and repairs.

• Network Connection Costs: The cost of network connection services for data center operations.

• Insurance and Taxes: Equipment and equipment insurance costs and property taxes.

• Environment and Sustainability Initiatives: Investments in green technologies and sustainability to reduce environmental impact, including renewable energy sources and energy-efficient appliances…

Reference: