Indian Hotels hits 52-week high; up 26% in a month on demand recovery hope

The company is hopeful of demand recovery in the US and the UK in the next three to four months with the Covid-19 situation coming under control

Shares of Indian Hotels Company hit a fresh 52-week high of Rs 140.50 on the BSE in intra-day trade on Monday on expectation of demand recovery as the Covid-19 situation gradually comes under control.

In the past one month, the stock of the Tata Group Company has rallied 26 per cent as compared to a 6 per cent gain in the S&P BSE Sensex. It surpassed its previous high of Rs 139, touched on December 7, 2020. Meanwhile, the stock had hit an all-time high of Rs 164 on June 26, 2019.

In January–March quarter (Q4FY21), Indian Hotels Company, South Asia’s largest hospitality company, had reported a positive Ebitda (earnings before interest, taxes, depreciation, and amortization) of Rs 83 crore, an increase of 118 per cent from December quarter (Q3FY21). The company recorded its highest number of new hotel signings and openings in the industry during financial year 2020-21 with 17 signings and seven new hotel openings.

The management guided that though the domestic operations have witnessed traction, recovery in international business is commendable. Also, the company’s focus on being cost prudent will aid in Ebitda margin expansion, despite subdued net sales in near future. The company is hopeful of demand recovery in the US and the UK in the next three to four months with the situation now gradually coming under control.

Overall, analysts at ICICI Securities expect tourism to witness a sharp recovery in FY23E. "Given IHCL’s strong parentage and brand visibility along with meaningful cost optimisation measures, concerns with respect to liquidity are now being negated," it said in a report.

Global tourism suffered its worst-ever year in 2020, with international arrivals dropping by 74 per cent according to the latest data from the United Nations World Tourism Organization (UNWTO), it added.

"Most experts do not see global travel returning to prepandemic levels before 2023. Amongst all regions, Asia-Pacific is likely to see the highest rebound of international tourism. UNWTO’s extended scenarios for 2021-2024 indicate that it could take two and a half to four years for international tourism to return to 2019 levels. In one scenario projected by it, there could be a rebound in September 2021, with 22 per cent increase in international arrivals. Another scenario sees a rebound in July 2021, with international arrivals increasing by 66 per cent for 2021 compared to the historic lows of 2020. One optimistic scenario projects arrivals at 55 per cent below the pre-pandemic levels recorded in 2019," Indian Hotels said in 2020-21 annual report.

The scenarios consider several factors such as a gradual improvement of the epidemiological situation, continued rollout of the Covid-19 vaccine, a significant improvement in traveller confidence and a major lifting of travel restrictions, particularly in Europe and the Americas, the company said.

The Indian Hotels Company Limited and its subsidiaries bring together a group of brands and businesses that offer a fusion of warm Indian hospitality and world-class service. These include Taj – the hallmark of iconic hospitality and India’s Strongest Brand as per Brand Finance India 100 2020 report, SeleQtions, a named collection of hotels, Vivanta, sophisticated upscale hotels and Ginger, which is revolutionising the lean luxe segment.