Thank you for answering this! I had forgotten about it

If I understand you correctly, it is only the change in the value of the deferred tax that is recognized in the P&L, i.e. when the deferred tax liability was first recorded in the balance sheet as a long term/short term liability, there was no “deferred tax” P&L entry as such. Rather when it originally entered the balance sheet as a “deferred tax liability”, there was also an equivalent “tax/estimated tax” that was deducted from PBT. Now since more tax was deducted in the P&L then (maybe 2 quarters prior), it has to be reversed now since that much tax is actually not going to be paid.

Is that correct or is my understanding wrong? Not an accountant, so some of this is a bit hard for me to grasp.

Sami Hotels Limited Q2 FY25 Earnings Conference Call Summary

Financial Performance

• Asset income, representing revenue generated from hotels, reached INR 266 crores, a 20% year-over-year increase. This growth was driven by strong same-store sales and the inclusion of the recently acquired AIC portfolio.
• Same-store asset revenue experienced a robust 13.3% year-over-year growth, leading to a 20.2% EBITDA growth and a margin expansion of nearly 40%.
• Asset EBITDA, reflecting hotel-level profitability, reached INR 104 crores, a 28% year-over-year increase.
• Asset EBITDA margin was 39.1% for the quarter, slightly diluted by the AIC portfolio which stood at 36%. Management anticipates material margin improvement in upcoming quarters as the integration of AIC properties continues.
• Consolidated EBITDA reached INR 97 crores, marking an impressive 80% year-over-year growth. The consolidated margin also reached 36%, with potential for further expansion.
• Depreciation expense and finance costs remained stable at INR 29 crores and INR 56 crores, respectively.
• Reported profit after tax stood at INR 12.6 crores.
• Management expects material EBITDA expansion in the second half of FY25 due to higher revenue and strong flow-through, driven by average room rate (ARR) growth.

Margin Guidance

• Seasonally stronger H2 FY25 is anticipated to result in substantial margin expansion, driven by increased EBITDA, stable depreciation, and stable finance costs.
• Integration of the AIC portfolio is expected to significantly improve margins.

Segment Performance

• Same-store assets (excluding recently acquired and pre-opening properties) demonstrated strong performance, achieving 16.5% year-on-year RevPAR growth in Q2.
• Upscale hotels in Bangalore and Hyderabad showed significant potential with trailing twelve-month revenue exceeding INR 50 lakhs per room.
• The recently acquired AIC portfolio is undergoing integration and conversion to managed hotels under Marriott, leading to margin improvements.
• Two midscale AIC hotels in Pune and Jaipur are being rebranded and repositioned as upscale Courtyard by Marriott and Tribute Portfolio hotels, respectively.
• Management anticipates that the share of upscale hotels in their portfolio will increase significantly, leading to higher revenue per key.

Management Guidance for the Future

• Sami Hotels has secured three new upscale and upper upscale hotels with approximately 525 rooms in Bangalore and Hyderabad.
• These additions are expected to materially augment portfolio growth and drive incremental revenue over the next 3-4 years.
• Internal growth levers, including the integration of AIC properties, renovation, and rebranding initiatives, are expected to improve performance further.
• The company is progressing with recycling capital through the sale of non-strategic assets to maintain a strong balance sheet and reduce leverage.
• Management emphasizes their focus on capital efficient growth and finding opportunities suitable for different market cycles.

Key Risks in the Business

• Potential downward cycles in the industry, impacting demand and profitability.
• Capacity constraints in the aviation industry, limiting passenger traffic and potentially affecting hotel demand.
• Execution risks associated with new hotel projects, including delays and cost overruns.
• Competition from other hotels in key markets.

Industry Trends

• Bangalore and Hyderabad markets continue to demonstrate strong growth, absorbing significant office space and experiencing high air passenger growth.
• Office space absorption in these markets indicates robust demand and positive economic activity.
• The hotel industry is experiencing slower supply growth compared to office space additions, creating a favorable demand-supply dynamic.
• Aviation capacity constraints are impacting passenger traffic, potentially influencing hotel demand in the short term.

Disc:Invested

Q2 FY25 Earnings Report and Takeaways from Investor Presentation

Summary of key financial and operational highlights from EPL’s latest earnings report:

Profitability

• EPL achieved nine consecutive quarters of EBITDA margin improvement.
• Q2 FY25 EBITDA margin reached 20%, driven by strategic price management, cost optimization, and automation investments.
• Profitability improvements in the Americas and Europe offset a decrease in AMESA.

Future Plans and Other Relevant Information

• Sustain Double-Digit Growth: EPL plans to achieve sustained double-digit growth by focusing on its “Personal Care & Beyond” category and scaling up its presence in Brazil.
• EBITDA Margin Expansion: The company aims to continue expanding EBITDA margins through various initiatives and reach a target of over 20%.
• Sustainability Leadership: EPL is committed to its sustainability initiatives, with a target of achieving EcoVadis Platinum status and partnering with customers on their sustainability journeys. The company has already achieved a Gold rating and is in the top 2% of companies globally. One-third of EPL’s portfolio consists of sustainable tubes, and the company is committed to increasing this proportion.
• New Product Categories: EPL is venturing into new categories, such as tubes for cat and dog lice treatment and dry hair gel.
• New Customers: EPL has added a new multinational customer in Brazil, its third in that market.
• Employee Recognition: EPL was certified as a “Great Place to Work” in six countries.

Well-positioned for continued growth and profitability. Strong market position, focus on innovation, and commitment to sustainability should drive continued success.

Disclaimer: Invested and Biased. Less than 5% of PF. No transactions in the last 30 days. Post purely for study purposes. Consult your advisor before any investment decisions.