Kamat Hotels India Ltd (NSE: KAMATHOTEL) Q2 2025 Earnings Call dated Oct. 28, 2024
Corporate Participants:
Vishal Vithal Kamat — Executive Director,
Smita Nanda — Chief Financial Officer
Unidentified Speaker
Analysts:
Purvangi Jain — Analyst
Ankur Kumar — Analyst
Shah — Analyst
Reyansh — Analyst
Sakshee Chhabra — Analyst
Mahesh — Analyst
Tarik — Analyst
Unidentified Participant
Sahil Karia — Analyst
Dhruv Agarwala — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Kamat Hotels Limited India Q2 and H1 FY’25 Earnings Conference Call hosted by Valorem Advisors. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Ms. Purvangi Jain from Valorem Advisors. Thank you, and over to you, ma’am.
Purvangi Jain — Analyst
Good evening, everyone, and a warm welcome to you all. My name is Purvangi Jain from Valorem Advisors. We represent the Investor Relations of Kamat Hotels India Limited. On behalf of the company, I would like to thank you all for participating in the company’s earnings conference call for the second-quarter and first-half of financial year 2025.
Before we begin, let me mention a short cautionary statement. Some of the statements made in today’s earnings call may be forward-looking in nature. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ from those anticipated. Such statements are based on management’s beliefs as well as assumptions made by and information currently available to the management. Audiences are cautioned not to place any undue reliance on these forward-looking statements in making any investment decisions. The purpose of today’s earnings call is purely to educate and bring awareness about the company’s fundamental business and financial quarter under review.
Let me now introduce you to the management participating with us in today’s earnings call and hand it over to them for their opening remarks. We have with us Mr. Vishal Vithal Kamat, Executive Director; Ms. Smita Nanda, Chief Financial Officer; and Mr. Nikhil Singh, Company Secretary and Compliance Officer. Without any further delay, I request Mr. Vishal Kamat to start with his opening remarks. Thank you, and over to you, sir.
Vishal Vithal Kamat — Executive Director,
Thank you very much. Namaskar, everyone. Great to have you all with us. We’ve had a — we’ve had good quarter is what I would see. We have already published the comprehensive presentation upon the stock exchange for all to see along with the results. One of the main things as earlier was seen because of the elections and the heat, but the next quarter was somewhat better. And now the best part is that Q3, Q4 is our more stronger — industry-wise, it is a more stronger quarter to come.
So we are seeing good traction in that regard in the coming through the wedding season and also the various corporate events, conferences. So we are looking positive on that. We have already been extensively and the work will almost end in the month of November end, the work will end for our Goa hotel.
Our Lotus resort, which was a very nice 30-year-old property of us has been completely revamped and it will launch in like I said, the 1st of December. So that is our current target, which we are as on track. That will become an Orchid hotel in Goa [indecipherable] basically where it’s a theme based on a carnival of boats. So we’ve got a very nice, very beautiful theme. So that is there.
And along with that, we also have our upgradation happening in the Orchid Pune where certain areas we have taken-up to expand because of the banquet demand. So there are certain things and all these expenses have been done through internal accrual. We have not looked at borrowing in line with the company’s thinking that every year, we should take-up two which we will upgrade so that like we did last year with by Orchid in Nashik when it was a 1,800 to 2,200 ADR hotel, today it is sitting at around 3,250 to 4,500. So that kind of upside is also there and guests expect better.
So we are able to match that expectation in terms of our brand. So with that, I look-forward to addressing you all and look-forward to all your questions. Thank you.
Smita Nanda — Chief Financial Officer
Namaskar. Thank you, sir, and good evening, everyone. Let me brief touch upon the key performance highlights for the quarter ended 30 September 2022. The consolidated revenue for the second-quarter was INR85 crores compared to last year’s 64 crores Q2 FY ’23, marking in — marking an increase of 33.4% year-on-year basis.
The EBITDA for Q2 FY ’25 was INR23 crores, up from INR19 crores in Q2 FY ’24, reflecting the growth of 20.3% year-on-year basis. With EBITDA margins reported at 26.35%, the profit-after-tax Q2 FY ’25 stood at INR8 crores, a significant improvement from INR30 lakh in Q2 FY ’22. For the first-half of financial year 2025, the consolidated revenue stood at INR159 crores, representing the growth of 19% year-on-year basis. The EBITDA stood at INR36 crores, which declined by 14% year-on-year basis with EBITDA margin reported 22.5%. The profit-after-tax was INR9.4 crores, which is substantially higher than the corresponding period quarter of the previous year, which with this, I conclude my remarks and request the moderator to open the floor for a question. Thank you.
Questions and Answers:
Operator
Thank you. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Ankur Kumar from Alpha Capital. Please go-ahead. Hello, sir.
Ankur Kumar
Thank you for taking my question and congrats for an improvement in numbers. Sir, I wanted to understand as in even second-half is stronger and this time also there are much higher weddings compared to last year. And given our — is a high fixed-cost kind of business, so given the improvement we are seeing, what kind of margins can we comment — can we get-in second-half? Yeah. So basically the margins will more or less remain the same because there are certain costs which have gone up, which we are looking at reducing.
Vishal Vithal Kamat
One is basically our electrical expenses have gone up, the other one being labor and manpower. So overall, there has been an increase in the cost of labor. So the margin would be more or less the same depending on hotel to hotel, it fluctuates. We are anywhere between 28% to 45% of the GOP. So with the season coming in, in fact, certain monthly sometimes find it going even higher.
But on a YTD basis, you can take that generally 35%, 30% — 32% to 38% in depending on hotel to hotel would be the GOP, what we call the gross operating profit, which is basically your expenses — sorry, your income minus the expenses. So it’s not exactly — you can say EBITDA, but it’s not exactly EBITDA. So that would be like gross margins.
Yes, gross margins, correct. Including — including employee expense. Yes, including employee expense or expenses.
Ankur Kumar
Got it, sir. Got it. And sir, can you also hold — sorry, please go-ahead. No, no, please. I was just saying, in fact, we also hold all other expenses also such as even lease and all. In those properties, it comes down further. It comes down to maybe around 15% to 18% in terms of margins. Got it, sir. And sir, on interest expense, as in — I can see that we have reduced the high-cost of debt and did refinance it. So what kind of — I think we are saying that there is a good reduction in interest expenses. So what is our color for the second-half as well as the next year, sir?
Vishal Vithal Kamat
So generally, sir, we give one participant one question, but I’ll just complain this since you’ve already asked. So that it’s fair to everyone and then when you can come back also. But since you asked, let me share with you that we basically were — we currently are at an interest-rate of around 10.75%, okay, 10.5%, I’m sorry, it was 7.5%, it has come down to 10.5 we currently are at a debt level of 120. So we currently are at a debt level of 120.
Our interest is at 10.5. And as we had already given the expectation that we should be this year, we will be net neutral whereby our EBITDA plus cash-in hand will be equal to or higher than the debt.
Ankur Kumar
Got it, sir. Thank you and all those. Thank you, sir. Thank. [Operator Instructions]. The next question is from the line of Shaha, who is an Individual investor. Please go-ahead.
Shah
Hi, thank you. Thank you so much for the opportunity. Sir, my first question was on the average ARR. So what were our average ARR for the Q2 and for H1 FY ’25? Thank you, Madam. Basically, we’ve had different ARRs in different hotels.
You can say around 6,000 has been broadly in Mumbai, around 6,000 has been in Ira, Mumbai, okay. Our Ford has been at around 8,000 okay same way in our notus resorts in Konak, it’s around INR5,000. So different hotels as you can see is different ARR, okay. So it’s very market subjective and these are basically for the Q1 — Q2 type scenario. In Q3, Q4, it will obviously go much higher. So we expect it to have a good growth.
So what are the targets for FY ’25?
Vishal Vithal Kamat
Sorry, target for ARR. What are our target — targeted ARR for FY ’25? So this is very difficult to give a targeted ARR marath because ARR is a function of the market. So while we would ideally want anywhere between what will be practically the 7% to 10% growth on a YTD basis because you’d want to beat inflation and you want to beat expenses.
The truth is that it is a very market-driven function. So we have to basically see a gain between the yield and the rates. So when it’s like example during Christmas New Year, it shoots up and it becomes much higher. But then subsequently the day before it might be lesser, like right now in Diwali, while our business hotels are unfortunately little down, but the domestic tourist areas such as our Lotus and Konark and all these other leisure destinations are moving.
So ARR is no target for an ARR. We have a target for a revenue and based on that, we work on because that is more important that we earn the revenues and the ARRs are a function of that.
Shah
Got it. Got it. And lastly, I had question, what were our average occupancy rate for that?
Vishal Vithal Kamat
We request you to please come back because like I said, it would be not fair because let’s take everybody because wise it becomes a little challenging. I’ll wait for you to answer your question or if someone else again answers this ask this question, you will get answered, madam. Okay. Thanks a lot, sir. And wish you a Happy Diwali. To you too. Thank you very much. I really appreciate. Happy Diwali to all the listeners and participants. Thank you.
Operator
[Operator Instructions]. The next question is from the line of Freyansh[Phonetic] from RM Securities. Please go-ahead.
Reyansh
Hello. Hi, Vishal. I had one question. So in the previous con-calls, we had given a guidance of INR400 crores for FY ’25 and I think I saw in your recent presentation that you have reduced it to INR350 crores. Regarding margins also, I think we spoke about that margins will remain stable, but again, they have come down from 30% to 18% in Q1 and 26% in Q2.
So I just wanted your thoughts on this, like how did we come up short of the numbers that you were expecting and what is our outlook going-forward? Okay, sir, the 18%, first-quarter, _ second-quarter. Yes, they did last year. So first-quarter will be 18th _ yeah. So sir, you’re right that we have revised our theme.
Vishal Vithal Kamat
We expected a couple of our hotels to open, which did not open, one being the Orchid and the other one being the Orchid Chandigarh, both being fairly large and very good revenue generators with good EBITDA margins. The Orchid Chandigarh is a 126 room hotel that has got delayed. That should be opening before the end of this financial year.
So we will get its full benefit next year. So whatever we give the projections and guidance, we expect that those guidance and projections to come with that and particularly because also is a large hotel with almost 100 with very good banqueting and a prime location. So we expected that, but unfortunately, that has also got delayed due to various reasons with the — in the city. So because of particularly these two, we have got delayed and that’s why we have revised the overall target.
So next year, whatever we said this, we will continue that and that will be achieved next year for sure. So what about the margins though, like they reduced like considerably in Q1 and Q2, right, from what was the EBITDA margin for you. Let me share one of the anomalies with our reporting is basically that there is a INR10 crore EBITDA reduced because of the lead now that comes.
So one is that if you compare this to — in fact, this issue will not come in the Q3 and Q4 because when we had taken on lease Ira, Mumbai that time the rental started from October last year. So this will be the first full financial year that has got completed. And that is why what you see in H1 and in H1, you see that INR10 crore reduction in EBITDA directly is because of that. So if you add that back and few other things, when basically It is somewhat is still not as good as what we expect. We expected it to do better. But still to just give you an apple-to-apple comparison, within this H1, if you add INR10 crore back, which is the lease rental, which earlier was forming part of the EBITDA, but was in the expenses as a interest. So this is basically one major difference which — once you correct in your — when you add-back rubbit, that you will see that it becomes a more apple-to-apple comparison. So that’s why you find the margin coming down considerably because INR10 crores is a large amount. Yeah. Sorry, just one small question. So you had said, see, this — I understand I had read this also, but this was there in Q4 FY ’24 also and the margin for Q4 FY ’24 and let’s say, Q2 FY ’25 are similar, but the Q1 is a big anomaly that the margins have reduced so much in Q1. Like so how do we look at it? And should we expect a quarter like this going-forward? Like as an investor, what should we expect? So sir, Q1 definitely, sir, Q1 wasnot a good quarter for us and the industry in general, especially particularly us because we are Mumbai-based, the elections and the heat both at that time affected us drastically, F&B business and our elections. So elections, luckily for us in this time, Maharashtra is a single-phase election, so it won’t affect us as a state so much. But earlier, because we were having so many phases, the elections drew out too long and it affected overall the movement of hospitality movement of corporate and other things. Either there is an election in their state or there was an election in Maharashtra and it’s because it was in so divided phases, it created that. So definitely, I agree with you that Q1 in general should have been a better quarter, but because of various cases, which was mainly extreme heat and what you call elections, this was a challenge. This does was it reduction due to reduction in ARR or was it due to occupancy.
Unidentified Speaker
Because of occupancy especially. ARR is stable for occupancy because of, like I said, people coming lesser. So ARR did not drop, but occupancy did drop, sir. Okay. I have a couple of more questions, but I’ll come back-in the queue. Thank you. I really appreciate that.
Operator
Thank you, sir. Thank you. Thank you. Next question is from the line of Sakshee Chhabra from Swan Investments. Please go-ahead.
Sakshee Chhabra
Yeah, hi, sir. So sir, my question was largely on your SMB cost. So your revenue quarter-on-quarter if I see has increased almost 16%, but the SMB cost has increased only around 3%. So can you just explain what was the reason behind that?
Vishal Vithal Kamat
So one of the reasons, Madam, it’s a very good question actually that why the F&B is not because mainly we have found a growth in our room business. The ARR, like I mentioned, improved and the — because of that you find the revenue growth in the room segment and not only in the F&B. F&B has been considerably lesser. Also, we have got better rates for our F&B. Our rates in banque rates and others have improved. But the food cost, when we look at the particular consumption of food and beverage, the food cost has not gone up too much, but the rates have got better.
So that’s how basically we’ve been able to keep this but — but the flip side of that is that in giving a better product and in giving a better experience, your labor cost goes up. You have more refined people, you have more staffing. So that’s why you find that these food costs have not gone up a lot, but the employee expenses have gone up. Plus also new hotel openings and other things also. So we have all these things.
So this will actually pan-out the high employee cost which is there, comparative high employee cost will pan-out because many of the properties are opening. Now the Noida will open in November on — rather on 7th of November we are opening. So that also will start. So unfortunately for five months, this got the staff and other things. Normally, we take not more than three months-to open, but due to various reasons at local level, we — this also got delayed by two to three months.
So that was an extra expense. That also will do — that is a very good location. It’s in Sector 62, right opposite Google, Cognizant and all these various ITs. So we have already a very good demand for it. I was one of the very few branded hotels are there. Is there, now era hotel will be there. Otherwise it’s marketed — market is very small up.
There is a very big vacuum there. So we are looking-forward to this thing. So these kind of things will start panning out. Chandigarh has got delayed. So we have a team working with our owners on Chandigarh Hotel that also will start panning out. And these will all get what we call smoothen. So this also is a cost which basically is going to come down mainly by increasing our revenues and opening more hotels.
Sakshee Chhabra
Okay, right. All right. Thank you so much. All the best. Thank you.
Operator
Thank you. Happy Diwali. Thank you. The next question is from the line of Mahesh, who is an individual Investor. Please go-ahead.
Mahesh
Congratulations on a good set of numbers. And thank you for the opportunity. So can you give the updates on the new properties that you were talking about in Noida,, Dehrajun and Chandigarh? Yes, sir. So even Bhagnagar again very well — I may missed out. Actually should have been placed. But again, because of the fire that happened in Rajkur, the government asked the owners to make many changes.
Unidentified Speaker
So that’s why — because again, it’s a leased property. So we are only able to do as much as what our owners can. So our owners are very good people. They own a lot of malls and other things in Gujarat. So diligently they have been — so that got delayed. So should have been on by now.
Chandigarh, like I mentioned to you, there are — now Noida is opening. Hyderabad will also take another few months more, which will take. Is a new hotel we have signed-up. Actually, we have not informed we should sign-up the informed normally. No, we don’t know. Only is a beautiful hotel right near the palace. It is an hotel, which will open by December ’25 is what we are as of now seeing the track. So these are all the new hotels which are opening.
Then we also have in Puri, our property, which is there. It’s already than the, but along with more than the, there will be a tower which is coming next to it, which will be a 156 room tower of room because Puri is a fantastic wedding destination. Of Naji is there and our property has a unique position of being very close to the temple with the temple view. So that’s how basically we have these properties which are in the upcoming.
Okay. So this question, sir, how we finance this? Are they on corporate leases on management? Each and every one of these, sir, are either in a lease or a revenue-share. So there is not much financing required. In fact, as I mentioned before, the company from internal accrual has been upgrading its coal hotels. We are not required to borrow any money and whatever surplus cash is generated, it is being parked to be utilized in the future.
Vishal Vithal Kamat
So because our target is basically to, like I said, be net zero by this year, which easily we are going to achieve that target. I don’t think we should be more than INR110 crores in terms of debt with maybe cash reserves in the 2025 range and apart from that our EBITDA also around 90 and although our target would be to beat that. But right now it looks like 90 is our target. Got it. Thank you for the opportunity.
Mahesh
Thank you, sir. Thank you very much. Thank you.
Operator
The next question is from the line of Tarik from Parallax. Please go-ahead.
Tarik
Hi, thank you for the opportunity. So I have a more of a qualitative question. Do we have in our strategy as Karma 3.0, something which is differentiating us from the competitors because I see a trend similarly as 10 years ago that a lot of our competitors are expanding and then we may have our, let’s say, capacities in the hotel industry.
Vishal Vithal Kamat
So do we have — are we just depending on the boom — the economic boom and do we have something differentiating us from the competitors? That’s a very nice, interesting question. Before I answer that question, I’d like to please correct myself. My CFO has given me good news that Mr, you are telling 90. It should be around 100 that you must please give the feedback because we will be achieving a GOP of — sorry EBIT of approximately INR100, so around INR100. See, so I correct myself there.
So then we are definitely crossing our target of being beyond the net positive even without the cash-in hands with us.
Tarik
Thank you very much. Thank you for the Diwali correction. Coming down to this very nice marketing question, it’s a little long question. I will try and keep it as brief as possible. First and foremost, please, sir, what differentiates us that we are Asia’s first five-star environmentally sensitive hotel?
Vishal Vithal Kamat
Commerce has the double-edge of being one, not just having ethos in terms of environmental hospitality, but also known for our food. So wherever you find the Kuna, Ocked, Mumbai, Era Hotels,, Era, by the way, is doing exceedingly well, whereby the food is 50%, sometimes going up to even 65% of the daily sale, depending on the day-to day and the thing. So where food is such a strong part because after a point you will see a beautiful group, you will see a beautiful view, you will see everything shiny. But after the 15 to-1 hour — 15 minutes to one-hour of glamour, when you go with your family, you are going to basically their judge or your family is going to judge the vacation based on how happy they were and that is food.
So food is one of our main strengths, which we have demonstrated time and as well, whether it is in Nasse[Phonetic] Kira or in or in also so food one. And secondly, like I said, our environmental assessment-sensitive hospitality allows us to connect with a lot of other corporates who are very much keen and we in fact get a advantage that when considering our ecotel assertation and other things.
So this is basically what also differentiates us in our standing. So definitely this connect which we have helps.
Tarik
Thank you, sir. Okay. Thank you.
Operator
Thank you. Thank you. [Operator Instructions] The next question is from the line of Shreyansh from[Phonetic] Please go-ahead.
Unidentified Participant
Hi. So on — my next question would be, what is like our growth outlook and what are the growth drivers that we’re looking at in the next couple of years?
Like how should we look at going for interrupt, sir. The management line has been disconnected. Please hold. Okay. Management line has been reconnected. Over to you, sir. Hello. Hi. So my next question would be, what is our growth outlook for the next couple of years? And what are the growth drivers that we are looking at? Like how should we look at going-forward?
Vishal Vithal Kamat
Because I think this year has been a little bit disappointing from our standards. So like should we expect? I understand your disappointment, sir. I am with you. We always expect more from ourselves. In the coming time, basically, our main focus is to grow steady. We are not in a hurry to just sign-up the.
I know that some of our peers have been signing-up and gone into excellent number games, but they have not gone into excellent quality in terms of revenue or in terms of the guest satisfaction, which basically hospitality is a long-term game. We cannot just sign-up for the sake of it and then lose out on our customers loyalty and customer.
By the way, you would be happy to know or other at least I can say about we have 37% of our customer-base is from repeat customers. 37% of commerce revenue comes from repeat customers. And this is all based on mobile numbers. We have a — our reward program where members put their things. So I’m very happy to tell you that that’s very-high.
And we’re talking about people who have come minimum twice. So you can imagine the kind of loyalty we have. And this is only after having a comparatively very small footprint as we have of only 14 properties. So as our property scale goes up, as these new properties come, I expect that this percentage to only enhance.
So one, our going-forward, what is it? We are taking properties on these more. There are many more announcements or maybe not announcements because we don’t announce, but like has been signed-up, a few more properties are there, which will be signed-up. So they will come in the presentation.
But the main focus is to take robust properties either on release or on this thing. Management is our — is in our frame, but it is not the main this thing because like in management, there are lot of challenges which come to get a like-minded owner who will be equally sincere to want to focus on your brand and his asset, that kind of marriage happens very difficult.
Most of them are only interested in taking your brand and then not interested in the qualitative aspect of it. So we do find these challenges because — and it’s an industry thing. So when we know these challenges, we’d rather stake properties where when if there is an issue is resolvable, when guests come, they are happy. So we will keep growing and we have a growth plan, which is basically to grow in a robust fashion and in a listing fashion, what do you call-in a short-footed way.
The main thing is what we are very concerned about is not doing a rapid expansion just to sign-up anything and then get hit by again a issue in the next, say, year and a half or two years because all good things will come to an equilibrium, like we saw in Corona after the 2020, ’21 was the worst, then ’21, ’22 was the boom, then ’22, ’23 was the super boom, ’23, ’24 has been a decline.
Foreign markets have opened up. Today it’s cheaper to go for a foreign holiday than to go to premium destinations in India. It is also now Visa rival, free Visa, various other incentives by various tourism books because India is by the way the world’s second-largest outbound industry after China. It used to be number-one China. I don’t know if India has overtaken that because China hasn’t been outbounding much after Corona.
So we are one of the largest, most lucrative market. People have already been seeing India in and out, so there would be a fatigue — there is a fatigue. In fact, this season of — for some of the places where people have gone in throngs, those places may have faced a challenge, though I cannot — I can say with assumption based on my friendship and, but figures will only come out subsequently.
Luckily for us, we are in those kind of markets like Monak and Puri and which are kind of evergreen markets, Ayodia. So I was recently interviewed on one of the channels and I said that politics has not stopped anyone. It’s not that will do well because of any political reason. It will continue to do well for God knows how long as God decides because people are going there in strong and they will continue to go in strong regardless of — now it’s a way of your.
So we have a couple of more properties we are signing-up over there. At the right time, we will inform you about it also because our current hotel is doing exceedingly well. And like I said, our food focus is there. We don’t want to take our FMB for granted. We are definitely food focused.
And there are certain other opportunities, which will allow us to scale-up really well and really fast because of which we are creating this entire cash-flow watch. We have no — we basically have — from the learnings of our past, we know that our real growth will come due to the — by being prudent right now and making sure that we can take advantage when the time comes.
There are opportunities even now also, everything is not a hunky-dory as you would see in some of the FMCG and others, what I was hearing on very nice interview on TV where the personal vehicles have slowed down, but premium bikes have also slowed down to a regular bike.
So you can find that there is a — again, that you all know what people thought. You only live once kind of scenario that has now fading out back into a more realistic sense of life. So where the over premiumization will go into qualitative premiumization. And that’s what our also target is. We aren’t aspiring to be in that ultra bracket because we are here, see, we are in hardcore Indian company. And Indian company always — we know that our market is in the premium, but in the rational premium market.
So we are keeping that segment in mind and doing it. I hope sir that answers your question. And I’m not sure that in the coming years, we will make you definitely more happy being part of us. Just one small follow-up question. So you said that this — obviously the leisure travel domestically has come down. So do you have any like plans to open hotels in Tier-1 cities so that you can take more advantage of those corporate travel things, things like that.
So, sir, we are doing a mixed bag. Let me again reiterate that I felt that those destinations which are over traveled, okay. So you would find that some of the places where you gone with your family once you might go to 3rd time like or. So there are. There are those kind of destinations opening up which earlier would not be so popular.
You know, it’s like as a person from Mumbai, like Bablash or [Phonetic]Janeika and. So then you find some new destination, which is offbeat, but within a driving range of three hours, four hours, five hours because you still want to go for holiday.
That has not changed. The nature of holiday, taking a family, going for short exclusion is a habit here to stay. But probably would you go to the same venue or same destination or same kind of thing, that is where the thing is. So it’s not fair for me to name any city because again, I would not be irresponsible about that. But broadly, I can tell you that over popular tourist destinations are seeing some kind of a case-to-case basis resistance and do you have more hotels in the pipeline or do you plan to open more hotels in Tier-1 cities? Like you have a couple, but I think obviously, there is always scope for more. Yes, sir, there is and we are — we are looking at — we are opening Noida on the 7th of November.
If any of our callers are there, I’d be very happy. My father also would be there. So if anyone is from back zone, you would be more than welcome to be a part of us from 7th to the 10th, we are there. So if we would — anyone would like to come, we’d be happy to be our guest with their family for lunch or dinner.
And that is opening, we are looking at some more hotels opportunity in Greater Noida and the other belt also. So there is a focus on Tier-1. The challenge with the Tier-1 right now is basically that again, while we’re getting properties for this what you call rentals, some of the rentals are still, wherein the downturn, I know that I will not be able to sustain. So I’d rather not take it today. I want to be prudent with our growth and I think that’s doing us well.
Tarik
Thank you, sir. Thank you.
Operator
Thank you. The next question is from the line of Raj Saraf from investors. Please go-ahead.
Sahil Karia
Sir, am I audible? Yes, yes, sir. Yes. Sir, sorry, I joined the conference call late. So excuse me if I’m being repeated to you. Sir, we have already occurred INR19 odd crores in finance cost. So what could be the interest expense going-forward in next six months? And the tax percentage, sir, what we are occruing the tax percentage.
Vishal Vithal Kamat
Sir, it’s okay if you are late because I will appreciate Diwali time here we are joined here. So I appreciate that. So don’t worry about it. Sir, going-forward, we basically will have approximately 12 of interest for the next six months. And tax percentage, what is the tax in your recurring?
Sir, the interest-rate is 10.5 the outstanding loan of our Axis Bank is 120 — around 120 CR. So 120 is with the INR12 crore. Next six months INR12 croress over 120 crores or 10% around INR7 crores, INR7 crores. Not INR27 crores — INR7 crores for the entire six months. INR7 crores for the next six months, sir. Yes, sir, next six months. And so the tax percentage, sir, tax percent if you want to know. 10.5, sir. So that’s the percentage.
Oh, sorry, I’m so sorry. I’m sorry. I only think of interest as the borrowers up that interest should might have happened better. So related to tax, no tax is still this quarter we were having zero next quarter and thus second-quarter, means for third and 4th-quarter we will be having 1.5 crores — INR1.5 crores and after that also almost on INR1.5 crores most probably but tax liability payable is this much, but liability should not be there because we have a per client like INR26 will be there.
So maybe most probably two color will get it a refund. Okay. So net tax outgo will be run. How much tax would be coming 2.5 crores to INR3 crores in-between three crores. INR3 crores and the finance cost would be close to INR7 crore. INR6 crores to INR7 crores, between INR6 to INR7 crores.
Sahil Karia
Okay. Thank you, ma’am.
Thank you.
Operator
Thank you. Thank you. The next question is from the line of Sail [Phonetic]Karia from White Pine Investment Managers. Please go-ahead.
Sahil Karia
Hello, sir. Thank you for the opportunity. Could you please give us the ARR numbers for Orchid, Mumbai and Mumbai properties for FY ’24 and also the occupancy rates. So thank you. So as I mentioned for Orchid, basically around 6,500 6,000 around — you can say broadly it’s around 7,000 for Orchid Mumbai and 6,000 for Mumbai okay and this is occupancy was for the H1 was both 74%. Okay, sir. Thank you. Thank you so much. Thank you, sir.
Operator
Thank you. Our next question is from the line of Dhru Agarwal, who is an individual investor. Please go-ahead.
Dhruv Agarwala
Hopefully I’m audible. Thank you. Thank you for giving the opportunity and congratulations on a very good set of numbers, sir. Sir, firstly, I have a question on this upcoming properties. What kind of revenue potential do you see from these properties, sir properties you want, you want to know what is the expected gr revenues from both these properties?
No, so my question is, sir, the upcoming properties that we are planning in Noida, Chandigarh, Hyderabad, Bhatnagar. From all these properties, what kind of potential revenue do you expect to commence, sir?
Vishal Vithal Kamat
So broadly, sir, basically what the thing is that we expect that we would be doing from Chandigarh, we expect to do around 30cr, okay. Even from, we expect to do around 30cr, okay, because they are, like I said, large banque-based hotels and that’s why we were to look at crossing our target of 400 as we had earlier mentioned.
Apart from that, we also have the other hotel,, which has got delayed, but once comes, that should also do around 10, okay. Again, that’s a one. And Noida basically expect also to do around 10 crores, okay. We have with — because right now Noida has only 40 odd rooms starting, the balance room start will be.
So that’s how basically we did our projection thought of INR400 crores.
At that time, Hyderabad was not there. Hyderabad should do around 8crores. The Hyderabad was not there. Was not there. Has just recently been signed. Also should be doing around 20 crores.
Dhruv Agarwala
Okay will take time. So that’s — okay. Okay, fine. And sir, on the debt side, you have currently around INR105 crores of debt. So are there any plans to become debt neutral in one to 10 years?Is there any guidance of that?
Vishal Vithal Kamat
Sorry, I already answered this question that we are at INR120 right now. We will be doing INR100 crores of EBITDA and we will be already having cash-in hand of around 20 25 crores So by this March 31st, we will already be zero, sir where our loan will be at March 31st of this year, financial year ending, we will be at a debt level of 110 crores with EBITDA of 100 crores and cash-in hand of 25 crores, 22 to 25 crores.
So already, sir, your question I have answered, maybe you have heard before. So we will be basically already more than net positive. Okay. So by this year end, we would be debt neutral according to you, more than net neutral deficit.
Dhruv Agarwala
Okay. Surplus, surplus. Okay, okay, fine. And sir, what kind of percentage growth one should expect in the ERRs and the revenue? I’m sorry, sir, I could not hear you. There was something in the middle.
Yeah. Okay. So I was saying what percentage of growth one should expect in H2 in average room rate, sir as H2 comparative is better than H1?
Vishal Vithal Kamat
We cannot predict for room rates, but I can — but we can say that always the ratio is at 40-60 where H2 is 60-ish approximately of H1. So room rates, I will not be able to predict, but revenue-wise that is normally the case.
Dhruv Agarwala
Thank you, sir. So I was just wanted to understand, sir, on the like average room rate, what like currently we have around INR6,700 of average room rate. So one should expect around 5% to 10% growth in average room rate at least 10% at least 10% to 15% is a minimum.
Okay, okay. And sir, sir, last one question. Seeing the demand sir, there are other callers. Sure, sure, sure. Sure. Sure, sir. Okay. Thank you. [Phonetic]. The next question is from the line of from. Please go-ahead.
Hi, Vishal. You mentioned that we have a repeat customer-base of 37% as loyalty customer. I was just wondering if on a phase business sounds really good. I was just wondering if we also have a benchmark like the industry, what’s happening with the competitors about the — what do we have?
Vishal Vithal Kamat
Sir, we don’t have a benchmark of the industry because I don’t know-how many people actually apart from a certain set of branded hotels companies actually have the kind of infrastructure in-place to measure it. I don’t know, sir. Unfortunately, I have no benchmarks. Ours is entirely based and linked on the mobile number that when you as an reward member come and you quote your mobile number, that time it is linked and tagged to your account and you get points, rewards, discounts, upgrades for your stay, just like any good loyalty program would be there. Now because ours is an integrated program and except for a couple of two hotels, all are part of the Group, that’s why we are able to enforce very nicely our program because it does have a cost. In other hotel companies, whether the owners do, don’t do does become a challenge.
So this becomes an issue in any managed hotel because owners may or may not want to participate in your program and there’s way, they will not see the value of repeat sometimes because they don’t — they don’t — unfortunately, when the times are good, that time they don’t want to spend.
And when times are bad, that end we don’t spend, you have to be consistent. We are very consistent in our, spending money on social media, interaction, WhatsApp’s marketing, all these kind of things which are there. So I have no benchmark, but I can say, sir, that it’s a figure which we are targeting to take it higher.
Dhruv Agarwala
Okay, got it, got it.
And my second question was about the plot on the NH8. I believe it was out on the Mumbai highway. Did we have any update or any timeline of what we are doing with the plot?
Vishal Vithal Kamat
Sir, currently, we have no update to provide at this moment because there have been certain developments like the Vadwan or Vadwan port and other things which are in that area. So that area is we are getting some more details about that. One of the largest ports of India is not very far from our property of the highway, which actually not India, it will be one of the largest in Asia.
So — and the major cargo terminal which Modiji has inaugurated. So we were doing some line of lens and then we took a pause on it because we said that it’s better for us to take a stock of exactly what is happening based on. So we’ll be able to take even more advantage of that. While Palgar and that area, Manor, Palgar is a very upmarket area, a area in terms of the real-estate and housing, but we thought we just be a little patient on it and do the.
Dhruv Agarwala
Okay, understood. That sounds good. Thank you so much. Happy Diwali.
Vishal Vithal Kamat
Thank you, sir you too. Thank you.
Operator
The next question is from the line of Sakshee Chhabra from Swan Investments. Please go-ahead.
Dhruv Agarwala
Yes, sir. I just wanted to understand you mentioned that you’re expecting INR100 crores of EBITDA in this year. So in H1, you’ve delivered around INR36 crores. So are you expecting that you will achieve INR64 crores of EBITDA in H2?
Vishal Vithal Kamat
No. If I go by my same 60-40 ratio, which I just mentioned in how H2, H1 is, then this would be around, say, anywhere between 95 to 100. So you are also expecting then the margins to be close to 30%.
Dhruv Agarwala
Yes, ma’am. Okay. All right. Thank you. I appreciate you coming back. Thank you.
Vishal Vithal Kamat
Thank you.
Operator
Thank you. The next question is from the line of Dhruv Agarwala [Phonetic]from RM Securities. Please go-ahead.
Dhruv Agarwala
Sir, this be the last question from my side. You had recently-announced the merger of your landholding — two of your landholding subsidiaries with and some equity allotment was done. So could you just explain what was the purpose of that merger? Because I think a garbage disposal plant was there, I think in one of the holdings and another was a parcel of land, right?
Vishal Vithal Kamat
So yes, sir. So basically this was a merger of two of the companies and basically this has land asset also. This has the property just now mentioned, which is 16 acres on the Gujarat highway. This also has a property of land which is betting to the Orchid hotel, which is also part of the thing, which has a sewage treatment plant on it. And this was actually something which has been actually in our books also noted from 2019, 12 _ 2012, 13, now regardless, it was from a long-time.
And right now, sir, as we have been doing various things, we’ve been cleaning up, making all the things neat and clean cleaning up the balance sheet. So this was there and that’s how basically this merger was proposed and done. So it will take effect once we get our — where-is it now in-process NCLT business sorry,.
So once it gets approval, then it will go into NCLT and the matters will get consummated, then of course, it will come to the numbers for approval and it will finish, hopefully conclude, so that we can then do other things.
Dhruv Agarwala
What are our plans for the land? So we will getting a decent chunk of land, right?
Vishal Vithal Kamat
So on 18 acres, sir, we plan to develop — along with a recruited developer, we plan to develop that 18 acres into a mix of residential and hospitality. It’s a highway touch, it’s also touching the, the Nali [Phonetic]and it’s a NA land. It is the only NA land on that belt. So it has a very good prime visibility, prime value and it can be developed because it’s. So it’s not that we have to wait for any conversion or anything. So we — again, it’s on the way to Partner and port, which I just mentioned.
Unidentified Participant
So we feel that it has an excellent long-term output, which it will give us a good mixed-use opportunity. Why not tell the land like why — you think it will use it more value when you develop it? Is that sir?
Vishal Vithal Kamat
No, I will not develop it, sir. I will join with someone and develop it with that person. If I wanted to sell it, I could have sold you before only. But I think that kind of land for us to again get and there also one parcel of 18 acres as today how township numbers and how people want it there, that would be next to impossible for us to get such a large piece of land on the highway side. In fact interior you will get, but this is right bang on the highway. It is — there used to be a restaurant there also long back.
But in the corona, we closed it and then we did not restart it post, but that is basically where the land is, 18 acres of river touch, river front. So it’s very prime location. Today, even if we go to sell it, we should get comfortably anywhere between 3.5 crore 4.5 cr for it. That is its value even if we sell it today. And if the need be, we can sell it, but what will we do with the cash? I mean, it is better that for us to see a long-term horizon with the hospitality play and additional, which will be more beneficial than one-time selling it.
This is my question. As of now, our thoughts can always change based on the need. If tomorrow we find some great hospitality opportunity and we decide that we need this, then we can always look at it. So that way. Our main objective right now looking-forward is basically just accumulate cash like a. We want to basically sir, do our growth from internal accruals. We want to basically grow by lease and by keeping our debt light, okay. So we will again every year we will be — this sale, this loan will be paid-off in three years even if we don’t do anything.
And yet we will have huge cash results because we don’t want to unnecessarily splurge and buy anything, we’ll be prudent and see. So we are very patient because we’ve come up with great difficulty. Pharma has bounced to with great difficulty in 2021, thanks to our various partners.
And we are always grateful to all our bankers who supported us in those 10 years of ARC. After that, our finance investors who came in, you know, Alpha Tru North and SBI. In fact, Alpha and SBI are still with us as our shareholders. So when we don’t want to do anything in a hurry just because you know we are sitting within and we will get a lot of good assets and a lot of good groups to take-over and we are patient for that.
We are playing the okay, sir. Thank you. Thank you, sir. Thank you very much. I think we can conclude this meeting because there’s no more questions of anybody. So sir, can you, can you please do the? Thank you. On behalf of Hotels Limited, that concludes this conference.
Operator
[Operator Closing Remarks]