Which Tata Group Stock Performed the Best in 2023? The Answer May Surprise You...

As Indian share market scales a new all-time high, most large-cap companies are experiencing a rally.

Even fund managers have started talking about the return of bluechip stocks after a prolonged underperformance when compared to their broader counterparts.

When talking about large-caps, how can one forget about the Tata Group stocks? As expected, many Tata stocks are experiencing a rally.

For example, Trent share price has rallied 122% in 2023 so far, while Tata Elxsi has offered 42% gains, Titan is up by 40% and TCS and Tata Steel are up about 15% each.

But, from the long list of 29 listed Tata Group stocks, do you know which company performed best in 2023 in terms of returns?

Was it recently listed Tata Technologies, or Tata Motors, or maybe Trent?

Hint: The stock was trading at around Rs 3,000 level in January 2023 and as of date, it is trading at Rs 8,740.

Yes, the stock has more than doubled investors' wealth in just a year.

So, which company are we talking about?

Well, the unsung hero is none other than Benares Hotels, the subsidiary company of Indian Hotels.

About Benares Hotels

To start with, we all know Taj Hotels which is the chain of luxury hotels and a subsidiary of the Indian Hotels Company (IHC) owned by the Tata Group.

Back in 2011, the lesser known Benares Hotels became a subsidiary of IHC and two of Benares Hotels were branded as Taj - Taj Ganges and Taj Nadesar Palace in Varanasi.

The third hotel which operates under Benares Hotel is The Gateway Hotel in Maharashtra which has been rebranded to Ginger Hotel.

All the three hotels are a part of the IHC's portfolio of hotels.

As of 2022, Benares Hotels generated 95% of its revenues from rooms, food, restaurant and banquet business.

Recently, the company decided to expand its business. Several new rooms were built in recent years to accommodate more guests.

As on date, Taj Ganges and Nadesar Palace at Varanasi has 144 rooms and suites, Ginger Hotel has 34 rooms.

What Fuelled the Rally in Benares Hotel Share Price in 2023?

#1 Strong Financials

Benares Hotels achieved record-breaking financial success, thanks to Taj IHC's renowned brand name which is leading in revenue per available room (RevPAR).

Now, RevPAR might sound like a fancy term, but it's basically a measure to understand how well a hotel business is doing. As Taj Ganges and Taj Nadesar Palace are a part of Taj hotel portfolio, they enjoy high occupancy rates which benefit Benares Hotel.

During the September 2023 quarter, Benares Hotels recorded impressive numbers. The hotel's net sales stood at Rs 259 million (m), a 46.2% jump from last year's Rs 177 m.

Net profit also skyrocketed by 130.4% to Rs 68 m, from Rs 30 m during the same period last year.

Earnings before interest, tax, depreciation and amortisation (EBITDA) surged to Rs 160 m, a 187% surge from Rs 56 m, year on year (YoY).

Now, if you see, the business has seen a steep turnaround in its financials from 2021 to 2023.

The revenue of Benares Hotels has almost doubled. Back in the financial year 2021-2022, the company reported Rs 500 m in revenues which has increased to Rs 950 m in the financial year 2022-2023.

During the same time, EBITDA has more than doubled from Rs 147 m to Rs 337 m. Moreover, the profit after tax (PAT) has soared over 4 times from Rs 57 m to Rs 234 m.

In fact, after Covid, the business is consistently reporting positive quarters which was not the case in 2021 and this is why there is increased optimism seen in the company's share price.

The chairman of Benares Hotels believes that the growth was due to a sharp revival in the Indian hospitality industry in 2023.

#2 Uptick in Travel Tourism

Year end comes with a vacation mood. Individuals often plan mini gateways way ahead in time. Hotel and airline tickets are booked months in advance for the holiday season.

And, it's no secret that luxurious 5-star hotels, particularly those within the Taj portfolio of hotels, will be in high demand during this period which will boost the profitability of its hotel businesses.

Hence, in anticipation of a robust quarter from the hospitality sector, hotel stocks have experienced an upward rally, reflecting the expected positive performance during this vacation season.

#3 Boom From the Wedding Season

With the onset of winter comes the much-celebrated wedding season. Every year a staggering 10 million marriages take place annually during this period.

You would be surprised to know that the marriage industry is India's fourth-largest industry, surpassing even cars, steel, and technology.

This glory of big fat weddings brings back to back booking of banquets across hotels, particularly 5 star hotels, which can boost revenues for the hotel.

With this anticipation, the stock price of Benares Hotels is rallying.

What's Next?

In line with the consistent increase in demand and high occupancies, Benares Hotels is focusing on growth.

In its annual report, the management mentioned that Taj Ganges will add a 100 room tower with larger rooms and take the total inventory to 230 rooms.

Moreover, industry experts believe that the average revenue per available room at the sector level is likely to grow by 15-20% in the second half of the financial year.

In Conclusion

From the long list of Tata Group stocks, Benares Hotel stood out as a standout performer in 2023.

After all, the markets consistently hold a deep appreciation for shares who show a positive turnaround in growth numbers.

However, investors must also be cautious as the hospitality industry can be highly sensitive to economic fluctuations and unforeseen events.

For more, here is a compiled list of Tata Group stocks you can refer to. This will help you understand more about the company's financials.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...