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Hotel Stocks - time to check in - Views on News from Equitymaster
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  • May 26, 2000

    Hotel Stocks - time to check in

    The hotel sector seems to have left behind all the negativity's that the industry has faced over the last two to three years. The overall economic scenario has improved considerably in the past year, this has lead to higher business confidence. Also as foreign direct investment is set to pick up, this should in turn give a boost to foreign and domestic business travel.

    FY2000, seems to have started on a good note for the hotel industry with tourist arrivals growing by 14.5% YoY in April'2000. The recent rupee depreciation too would benefit hotel earnings as over 60% of industry earnings are in foreign exchange. Also on the new room additions which are expected to pick up in the metro cities like Mumbai, we do not expect any major capacity expansions over the next two years as most expansions are going slow or are delayed.

    All these positive happenings seem to augur well for the hotel industry over the next two years. On valuation terms too the stocks look very attractive. The two largest Indian hotel chains Indian Hotels Company Ltd and EIH Ltd have underperformed the market massively in the past three years.

    However over the last two weeks the stocks seems to have outperformed the market although marginally and have survived the recent fall in the market, indicating a positive outlook.

    Share price performance in absolute and relative terms...
    May' 2000
    Dividend yield
    (%) FY99
    Indian Hotels Co. Ltd (Rs) 198 202 240 249 4.3%
    Absolute (%)   -2.0% -17.5% -20.5%  
    Relative to BSE Sensex (%)   4.0% -6.0% 2.0%  
    EIH Ltd (Rs) 111 117 126 141 4.5%
    Absolute (%)   -5.1% -11.9% -21.3%  
    Relative to BSE Sensex (%)   1.0% 0.0% 1.0%  
    BSE Sensex 3,999 4,252 4,534 5,141  
    Absolute (%)   -6.0% -11.8% -22.2%  

    With investors on the look out for value economy stocks, these two companies are likely to generate interest as the fortunes of the hotel industry too are looking attractive.

    Indian Hotels is currently trading at a price to earnings of 7.8xFY99 and EIH Ltd at 6.0xFY99, and with dividend yields of 4.3% and 4.5% respectively, they seem very attractive at these levels.



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    More Views on News

    Indian Hotels: Domestic Operations Performs Well (Quarterly Results Update - Detailed)

    Oct 17, 2016

    Indian Hotels has reported a 5.6% YoY increase in the consolidated topline and a consolidated loss of Rs 1,695 m for 1QFY17.

    Indian Hotels: Recovery Still Far Away (Quarterly Results Update - Detailed)

    Mar 28, 2016

    Indian Hotels has reported a 13.2% YoY increase in the consolidated topline and a standalone net profit of Rs 1.2 m for the quarter ended December 2015.

    Indian Hotels: A good operating performance (Quarterly Results Update - Detailed)

    Nov 24, 2015

    Indian Hotels has reported a 13.2% YoY increase in the standalone topline and a standalone net profit of Rs 1.2 m for the quarter ended September 2015.

    Indian Hotels: Exceptional gain boosts bottomline (Quarterly Results Update - Detailed)

    Aug 28, 2015

    Indian Hotels has reported a 10.2% YoY increase in the consolidated topline and a consolidated net profit of Rs 348 m for the quarter ended June 2015.

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