Indian Hotels slips 18% in 1 week on growth concerns; stock hits 17-mth low

Hotel industry's performance this fiscal has been impacted by various factors, including Jet Airways shutdown, general elections, protests, and lack of demand due to general slowdown

Shares of Indian Hotels Company were trading lower for the fifth straight day, sliding 7 per cent to hit a 17-month low of Rs 115, on the BSE on Thursday in the intra-day trade on concerns of soft demand due to outbreak of coronavirus.

The stock of the Tata Group Company was trading at its lowest level since October 9, 2018. In the past one week, it has slipped 18 per cent, as compared to a 2.3 per cent decline in the S&P BSE Sensex.

India’s hotel industry's performance this fiscal has been impacted by various factors, including Jet Airways shutdown, general elections, protests (albeit to a smaller extent) in the NCR region, and the lack of pick-up in corporate demand due to the economic slowdown.

Analysts had expected Indian Hotel’s revenue to grow at mid-single digit for FY20 compared to a double digit growth in FY19 as hotels industry gets impacted by general slowdown. They say near term challenges remain on slow economic growth and coronavirus crisis, but growth could improve in the medium to long term.

“The management remained relatively positive of the demand outlook from medium to long term prospective. The company maintained its guidance of improving consolidated EBITDA margins to 25 per cent by 2022 (pre IndAS -116). Although, escalation of the coronavirus crisis could pose some negative impact on the hotels industry, near term loss of cancellation from international tourist is filled by strong domestic demand,” analysts at Antique Stock Broking said in an analyst meet update.

Indian Hotels is well on track to achieve its ‘Aspiration 2022’ goal and has made good progress on other strategic initiatives like rebranding of Ginger, monetizing of existing landbank, selling non-core assets, JV with GIC to add rooms and creating alternative revenue streams (like re-launching of Chambers, Ama), according to analysts at Motilal Oswal Securities.

At 12:41 pm, the stock was trading 5 per cent lower at Rs 117 on the BSE, as against a 0.86 per cent rise in the S&P BSE Sensex. A combined 4.7 million shares have changed hands on the counter on the NSE and BSE so far.