Ebitdad Rajat

This Hospitality giant has turned it's fixed-cost-heavy business model into a profit-making machine, by improving occupancy rates and maximizing revenue per room.

Its a master class in — Operating Leverage.

FY 2019
- Sales: INR 4512 Crore
- EBITDA: INR 830 crore
- PAT: INR 296 crore
- EBITDA Margin: 18%

FY 2024
- Sales: INR 6769 Crore
- EBITDA: INR 2160 crore
- PAT: INR 1330 crore
- EBITDA Margin: 32%

Growth over 5 Years:
1. The Topline of the Indian Hotels has seen growth of 50% in last 5 years.
2. EBITDA and PAT has grown massively during this period, and EBITDA margin has jumped from 18% to 32%.
3. The Latest Quarter EBITDA margin was 38% - proof that leveraging fixed asset costs pays off.

Hospitalities Companies with the high fixed costs, such as property maintenance, staff salaries, and utilities. and these costs remain constant regardless of occupancy, as Higher Occupancy rates increases these fixed costs are spread across more revenue to more efficient use of fixed assets, boosting profitability.
Also good Capacity Utilization, unlike hotels, can deliver good returns in the growing phases.

The result? Operating Leverage where profits grow disproportionately faster than sales.

Sectors like Hospitality, Airlines, and Manufacturing, which have high fixed costs and cyclical demand, are the classic examples of industries with significant operating

Analysts or Investors should keep a track on Fixed-to-variable cost ratio is very important. Companies can convert more fixed cost to variable costs (by outsourcing) can mitigate the downside risk of operating leverage, a dip in sales can result into larger drop in profits.

Disclaimer - Not Reco neither holding this stock. Analysis is for educational purposes only.

In Telecom, where Cash is King, Ever wondered how a telecom giant like Bharti Airtel manages its Cash flow.
This is a Master Class on Bharti Airtel's on Negative Working Capital

Overview of Sales and Working Capital Trends:
2016 = -395 (WC)      Vs  96,532 (Sales)
2017 = -3,507 (WC)   Vs  95,468 (Sales)
2018 = 591 (WC)       Vs  82,639 (Sales)
2019 =-5,537 (WC)    Vs  80,780 (Sales)
2020 = -16,596 (WC) Vs  87,539 (Sales)
2021 = 3,043 (WC)    Vs  100,616 (Sales)
2022 = -1,447 (WC)   Vs  116,547 (Sales)
2023 = -3,112 (WC)    Vs  139,145 (Sales)
2024 = 2,414 (WC)     Vs  149,982 (Sales)

🔷 (2016 - 2020) Declining Sales and Increasing Negative Working Capital:
The Company Sales had a sharp decline from Rs 96,532 crores in 2016 to Rs 80,780 crores in 2019.
This period had an intense competition in the Telecom Sector, The primary reason is Reliance Jio's market entry and creating disruption by giving free internet data and calling for a good period of time.

Airtel had to sustain high Capex to remain competitive, which could be a reason for high negative working capital with declining Sales.

🔷 (2020 - 2021) Company Turnaround: Sales Recovery and Working Capital Improvement.
The Company Sales has rebounded from Rs 87,539 crores in 2020 to Rs 1,00,616 crores in 2021.
The Working Capital improved significantly from -16,596 in 2020 to 3,043 crores in 2021.
The Co. has improved the cost structures in manufacturing and other cost items of 1% and 2% respectively.

🔷 (2022 - 2024) Continued Sales Growth and Working Capital fluctuation.
The Company Sales has grown from Rs 1,16,547 crores in 2022 to Rs 1,49,982 crores in 2024.
Despite rising in Sales, the working capital turned negative in 2022 and 2023 but recovered to 2,414 in 2024.

There was a rise in Capex during this period most likely for network expansion e.g. 5G rollout.
The positive change in WC is indicating the Co. has improved its cash flow management.

Disclaimer - Not Reco neither holding this Airtel share. But I am already invested in RIL and Jiofin.

I have been tracking Hindustan Uniliver Limited (HUL) for a while now, and it has a standout performance in Operating Margin growth as compared to its peers, HUL has delivered impressive results. EPS has expanded from 16% in 2013 to 24% in 2024.

what caught my attention was thier strategic approach: by cutting off the"Cliffs" (Demerger and Sale of Non-core business) and M&A.

These moves seem to be a calculated effort to streamline operations and focus on high-margin, core categories.

1. Spin-off: Sale of Ice cream business.
It is a attractive category with high growth business with iconic brands such as Kwality walls, Cornetto and Magnum and totally opposite to its core business in terms of operations, since it requires cold chain infrastructure, unique distribution channel and limited integrations opportunities.
Ice-cream business contributes 3% of the total revenues in FY24,

2. Sale of Pureit to A.O Smith:
HUL is selling its water purification business to AO Smith India for around Rs 601 Crores or $72M, the turnover was around 293 crore in FY24.

3. Cutting down the Manufacturing cost:
Has cut manufacturing cost by nearly half over the 10 years period, from 11.30% to 6.19% in 10 years. as a result of these effeciencies, HUL OP margin from 16% to 24% over this period.
and its manufacturing cost is now at historic low.

4. Merger and Acquisition Intensity:
Big companies like HUL acquires a smaller company, which operates in same main core portfolio, with this, HUL larger scale leads to cost efficiences and benifit from the operational synergies.

By shredding lower margin and non-core segments, HUL is doubling down on its strengths, with more focused portfolio.

Disclaimer: Neither Reco not Holding to is particular security

Asian Paints has faced a toughed year due to global issues like Geopolitical tension in between Iran- Israel followed by Ukraine-Russia, and Inflation.

Rural Market hasn't performed well due to the rising prices. but still manages to preform well by by focusing on Strong Economy.

1. Decorative Paint: is the Bread and butter, sold good no's of pain in both premium and budget ranges. Budget range did especially, since it makes more affordable to buy for middle class

2. Industrial Coating: After partnering with US Company, PPG Industries for improving industrial products. this has helped the Co. to grow in areas like Car Paints and and Protective coatings for building.

3. Home Decor: This segment is not just about paint anymore, they are just expanding beyond walls, helping customers to decorate entire home (its more of from Kitchen Cabinets-Fancy lightening)

MD&A Summary is taken by using Company Annual Report FY23-24. And its not an Recommendation.