EIH Associated Hotels Reports Flat Performance in Q2, Non-Operating Income a Concern

EIH Associated Hotels, a smallcap company in the hotel, resort, and restaurant industry, recently announced its financial results for the quarter ending September 2024. According to the report, the company's performance has remained flat in the second quarter of the fiscal year 2024-25. However, there has been a slight improvement in the overall score, which has increased from -4 to 0 in the last three months.

The company's cash and cash equivalents have shown a positive trend, with the highest amount of Rs 47.40 crore in the last six half-yearly periods. This indicates an improvement in short-term liquidity. Additionally, the debtors turnover ratio has also shown a positive trend, with the highest figure of 31.68 times in the last five half-yearly periods. This suggests that the company has been able to settle its debtors at a faster rate.

On the other hand, the company's net sales have fallen by 25.9% in the quarter, compared to the average net sales of the previous four quarters. This indicates a negative trend in near-term sales. Similarly, the profit before tax (PBT) has also fallen by 88.0% in the quarter, compared to the average PBT of the previous four quarters. The profit after tax (PAT) has also shown a decline of 73.0% in the quarter, compared to the average PAT of the previous four quarters. These figures suggest a negative trend in near-term PBT and PAT.

One concerning aspect of the company's financials is the high non-operating income, which accounts for 61.41% of the PBT. This indicates that the company's income from non-business activities is high, which may not be a sustainable business model.

Based on these financial results, MarketsMOJO has given a 'Sell' call for EIH Associated Hotels. Investors should carefully consider these factors before making any investment decisions.