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Hotel stocks in focus; TajGVK, Royal Orchid, Indian Hotels up over 5%

Indian Hotels Company has rallied 9% to Rs 147 on BSE in intra-day trade, gaining 12% in the last six trading days.

SI Reporter  |  Mumbai 

Hotel
As GST has crimped hoteliers’ ability to up rates in line with costs, they are tweaking their pricing strategies to adjust to the new stickiness in the market

Shares of hotel companies are in focus with TajGVK Hotels & Resorts, Royal Orchid Hotels, Company, EIH Associated Hotels and India Tourism Development Corporation (ITDC) rallying by up to 18% on BSE in intra-day trade on the expectation of an exponential growth over the next three years.

Company has rallied 9% to Rs 147 on BSE in intra-day trade, gaining 12% in past six trading days, after the company reported 400 basis points (bps) Ebitda (earnings before interest, tax, depreciation and amortization) margin expansions at 10.3% in September quarter (Q2FY19). is the largest player in the hospitality sector in India, with an inventory of 17,000+ rooms.

The market experts believe that the domestic hotel industry is expected to witness robust growth in the coming years led by higher occupancy, limited capacity addition and a rise in spending by domestic travellers.

“In recent few years, the industry has been witnessing some green shoots mainly led by a decline in room supply and increase in demand. The proposed supply of rooms has significantly reduced from 114,446 in FY08 to 47,067 in FY17 (source: HVS). This is further validated by the fact that demands growth (5.0% YoY) has outpaced supply growth (3.2% YoY) in FY18,” analysts at ICICI Securities said in result update.

The brokerage firm expects occupancy levels to improve further due to the rise in spending by domestic travellers. In addition, with the improved tourism measures by the government, we expect the sector to see a better growth trajectory and healthy pricing in the next three to four years.

Analysts at JP Morgan believe market demand-supply dynamics will be favorable for the hotel industry until 2021 and the hotel cycle will get into mid-cycle over FY19/20 indicating the scope for RevPAR (Revenue per Available Room) improvement across domestic Given the imputed leverage both in operations and financials, consequent improvements in earnings could be significant.

COMPANY LATEST PREV CLOSE GAIN(%)
TAJGVK HOTELS 174.55 156.15 11.78
ROYAL ORCH.HOTEL 125.40 115.05 9.00
INDIAN HOTELS 142.50 134.50 5.95
I T D C 321.80 304.80 5.58
EIH ASSOC.HOTELS 320.80 307.95 4.17
ORIENTAL HOTELS 38.75 37.40 3.61
EIH 170.00 166.75 1.95

First Published: Thu, November 22 2018. 10:40 IST
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