Hotel stocks gain as Maharashtra govt eases lockdown restrictions

Shares of Kamat Hotels (India) were locked in upper circuit of 20 per cent

Shares of companies engaged in hotels and restaurants business rallied by up to 20 per cent on the BSE on Tuesday after the Maharashtra government allowed hotels to reopen from Wednesday.

Kamat Hotels (India) shares were locked in upper circuit of 20 per cent at Rs 35.03 on the BSE while Royal Orchid Hotels, Speciality Restaurants, Chalet Hotels, EIH Associated Hotels, and Indian Hotels were up by more than 6 per cent on the BSE.

Westlife Development rose 6 per cent to Rs 340 on the BSE. The Company is engaged in developing the country's QSR or a Quick Service Restaurant industry through its wholly-owned subsidiary HRPL (Hardcastle Restaurants Private Limited) which operates McDonald's restaurants in Western and Southern India through a master franchisee arrangement with McDonald's Corporation.

Jubilant FoodWorks was up 4 per cent to Rs 1,809 on the back of two-fold jump in trading volumes. The stock is 9 per cent away from its 52-week high of Rs 1,973, touched on February 3, 2020. The company has the exclusive rights to develop and operate Domino's Pizza brand in India, Sri Lanka, Bangladesh, and Nepal.

According to PTI reports, the Maharashtra government on Monday allowed hotels and other entities providing accommodation services outside containment zones to resume operations at 33 per cent of their capacity from July 8. CLICK HERE TO READ FULL REPORT

It is to be noted here that the fixed costs for any restaurant such as labour, power, raw materials, and rentals remains quite high and getting the desired footfalls to maximise cost benefit from operations currently looks unlikely.

“In case of Hotels, with limited domestic airlines operating, demand is expected to remain low. Also, people are expected to avoid travel without purpose. Demand in Q1 and Q2 FY21 is expected to continue remain negligible despite services being operational while some traction can be expected post September-October 2020,” analysts at CARE Rating said in recent note.