Shares of hotel companies were trading higher in the intra-day trade on Monday with Savera Industries, Kamat Hotels, India Tourism Development Corporation and Asian Hotels rallying up to 11 per cent on BSE amid reports the hospitality and tourism industry in India is set to witness an uptick going ahead.
Savera Industries jumped over 11 per cent to Rs 76.65 while Kamat Hotels was trading 8.49 per cent higher at Rs 45.35 apiece. India Tourism Development Corporation (ITDC) was trading at Rs 314.60, up 6.27 per cent on BSE in the intra-day deals.
According to a report by Motilal Oswal Financial Services (MOSL), fundamentals for the Indian hospitality industry are turning favorable, with demand growth (10-12 per cent) likely to outpace supply growth (5 per cent over FY18-23). Earlier, new inventory/room supply growth of 10.6 per cent against room demand growth of 10.2 per cent over FY08-18, was keeping the hotel room rates in check. However, with the pace of new room addition slowing down, signs that the market is finally absorbing the additional supply are now visible. As a result, occupancy levels have inched up from 58 per cent in FY13 to 67 per cent in FY18, the report added.
"The hotel stocks have not performed well during the last three to four years. Thus, currently, value buying is being witnessed in select stocks. Also, the portfolio diversification, which is happening in this industry, is another major reason why hotel stocks are rallying, explains Vivek Kumar Negi, Director Finethic Wealth Services.
“With the holiday season round the corner, there is a turnaround period for not only this industry but for travel and tourism as well. Therefore, companies like Cox and Kings, Mahindra Holidays, are also expected to perform well in the coming days,"Negi added.
At 12:20 pm, shares of Savera Industries were trading 11.17 per cent higher at Rs 76.65, Kamat hotels was trading at Rs 44.95 up 7.54 per cent, India Tourism Development Corporation was trading 6.40 per cent higher at Rs 315 on BSE. In comparison, S&P BSE Sensex was trading 245 points higher at 36,199 levels.