EIH (EIHOTEL)
CyclicalFairStock Score: 71/100 — STEADY
Score breakdown: P/E: 1/3 · ROCE: 1/2 · Growth: 0/2 · Dividend: 0/1
Key Financials
| Current Price | ₹300.35 |
| Market Cap | ₹18,782.81 Cr |
| P/E Ratio | 26.39 |
| ROCE | 23.43% |
| ROE | 13.95% |
| Dividend Yield | 0.5% |
| Profit Growth | 249.53% |
| Debt/Equity | 0.05 |
| Sales Growth | 5.02% |
| Free Cash Flow | ₹401 Cr |
| Promoter Holding | 32.85% |
| 52-Week Range | ₹271.15 — ₹413.95 |
| Sector | Leisure Services |
| Book Value | ₹84.15 |
Strengths
- Minimal leverage: D/E of 0.05 and free cash flow of ₹401 Cr provide a strong financial cushion.
- High capital efficiency: ROCE of 23.43% and ROE of 13.95% indicate a quality hotel franchise with pricing power.
- Piotroski F-score of 7/9 and Altman Z-score of 3.87 point to sound financial health.
- Five-year revenue CAGR of 40.90% shows strong demand momentum in the hotel cycle.
Concerns
- Valuation is rich: P/E of 25.82, P/B of 4.49, Graham Number of ₹130.68, DCF value of ₹56.04, and negative margin of safety.
- Profit growth is -9.28% despite revenue growth of 8.08%, indicating margin pressure or normalization.
- Latest quarter net margin of roughly 29% may be unsustainably high for hotels, creating downside risk to earnings.
- Dividend yield of just 0.48% provides little income support while waiting for undervaluation.
AI Analysis
Looking at EIH, I’m reminded that a wonderful business can still be a poor investment at the wrong price. The financial health is genuinely impressive: debt/equity of just 0.05, free cash flow of ₹401 Cr, and an Altman Z-score of 3.87 suggest this hotel company will not keep me awake at night. ROCE of 23.43% and ROE of 13.95% show capital discipline and a franchise that can generate returns above its cost of capital. The Piotroski F-score of 7/9 reinforces the soundness. But the Graham in me is uneasy. Book value is ₹73.76; Graham Number is ₹130.68. At ₹331.55, I am paying 4.49 times book and 25.82 times earnings. The DCF intrinsic value of ₹56.04 is far below the market price, and the negative margin of safety means the market has already priced in a great deal of good news. The five-year revenue CAGR of 40.90% looks spectacular, but that is heavily influenced by recovery from COVID lows; current sales growth is only 8.08%, and profit has actually fallen 9.28%. Hotels are cyclical, and the latest quarter’s net margin of about 29% may be near a cyclical peak, not a permanent state. For a value investor, EIH is a good company but not a good stock at this price. I would wait for a margin of safety closer to the Graham Number, or for earnings to grow into the valuation. Patience is a virtue.
Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer