Indian Hotels: Going global - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Indian Hotels: Going global

Dec 26, 2000

India's largest hotel chain, Indian Hotels Company Ltd (IHCL) is firming up its global expansion plans. Expanding its room base and renovation of existing hotels properties seems top on IHCL's agenda these days. The company is getting ready to meet the future domestic competition and has plans of going global as it wants to spread its eggs in more than one basket. For its expansion plans in the Asia region the company is in the process of finalising its plans to set up a subsidiary by the name of Taj Asia. This company is likely to be a joint venture along with a strategic investor. IHCL is likely to divest 50% stake in this company to a strategic partner. They also plan to merge the operations of Taj SriLanka and Taj Maldives into Taj Asia. These companies operate separately currently.

The company is also trying to purchase the Carlysle Hotel in New York and if this deals goes through the company would have to cough up around US$ 70 m as the rest (US$ 70 m) would be met via raising of debt. Besides IHCL is also on the look out for properties in Los Angeles and Chicago so as to increase their presence.

On the domestic front the company is in the process of acquiring the 104 room Radisson Hotel in Chennai. It makes sense to buy an existing property as it saves the company the gestation period of 4 years before a hotel in India can actually start operations. This is being done through its affiliate company in the South, Oriental Hotels Ltd.

IHCL is also planning a foray into the budget hotels segment. Currently the company operates in three areas in India. These are the luxury hotels segment, first class business hotels and the leisure hotels segment. The company plans to firm up its branding strategy for the budget segment by 2001-2002.The company plans to fund all its future capital expenditure plans via a mix of debt and equity.

The company is also in a very good position to receive some bounty from ITDC's forthcoming disinvestment. It has been in the news recently as it has a 10% stake in ITDC and hence is likely to benefit more than others who are vying for ITDC's prime hotel properties.

IHCL's strategy of going global will benefit its domestic operations by strengthening its brand image and opening up of higher marketing avenues.

Luxury hotels occupancies up
Occupancy rates (%) 1QFY01 1QFY00 2QFY01 2QFY00
Taj Luxury Hotels 57.0% 49.0% 57.0% 54.0%
Taj Leisure Hotels 37.0% 48.0% 38.0% 38.0%
Taj Business Hotels 52.0% 59.0% 53.0% 63.0%

In the current year IHCL has benefited from higher occupancy rates in metro city hotels as they get respectively 65% of its profits from their Mumbai and Delhi hotels. The markets look forward to strong 3Q results as room tariffs were revised up in October 2000 by IHCL for their metro hotels. This is the first time in four years, that hotel companies were able to revise their tariffs upwards.

Luxury hotels ARRs looking up in 2Q
ARR (Rs) 1QFY01 1QFY00 % change 2QFY01 2QFY00 % change
Taj Luxury Hotels 5,612 6,199 -9.0% 5443 5301 3.0%
Taj Leisure Hotels 2,030 1,841 10.0% 1703 1750 -3.0%
Taj Business Hotels 2,840 2,500 14.0% 2808 2494 13.0%

On valuations IHCL looks attractive. At the current price of Rs 225 it is trading at a 58% discount to its net asset value per share of Rs 541. On an EV/EBIDTA basis IHCL is trading at 6.2x FY02E. On a price to earnings multiple it is trading at 7.2x FY02E EPS of Rs 31.1.

Equitymaster requests your view! Post a comment on "Indian Hotels: Going global". Click here!

  

More Views on News

THE INDIAN HOTELS 2019-20 Annual Report Analysis (Annual Result Update)

Dec 1, 2020 | Updated on Dec 1, 2020

Here's an analysis of the annual report of THE INDIAN HOTELS for 2019-20. It includes a full income statement, balance sheet and cash flow analysis of THE INDIAN HOTELS. Also includes updates on the valuation of THE INDIAN HOTELS.

THE INDIAN HOTELS Announces Quarterly Results (4QFY20); Net Profit Down 42.9% (Quarterly Result Update)

Jun 11, 2020 | Updated on Jun 11, 2020

For the quarter ended March 2020, THE INDIAN HOTELS has posted a net profit of Rs 668 m (down 42.9% YoY). Sales on the other hand came in at Rs 11 bn (down 14.6% YoY). Read on for a complete analysis of THE INDIAN HOTELS's quarterly results.

THE INDIAN HOTELS Announces Quarterly Results (3QFY20); Net Profit Up 21.4% (Quarterly Result Update)

Feb 1, 2020 | Updated on Feb 1, 2020

For the quarter ended December 2019, THE INDIAN HOTELS has posted a net profit of Rs 2 bn (up 21.4% YoY). Sales on the other hand came in at Rs 14 bn (up 3.7% YoY). Read on for a complete analysis of THE INDIAN HOTELS's quarterly results.

THE INDIAN HOTELS 2018-19 Annual Report Analysis (Annual Result Update)

Jun 5, 2019 | Updated on Jun 5, 2019

Here's an analysis of the annual report of THE INDIAN HOTELS for 2018-19. It includes a full income statement, balance sheet and cash flow analysis of THE INDIAN HOTELS. Also includes updates on the valuation of THE INDIAN HOTELS.

More Views on News

Most Popular

India: Recovery Stalled by Vaccine Games? (The Honest Truth)

Apr 13, 2021

Ajit Dayal on how India's vaccine strategy will impact the markets.

4 Stocks to Make Your Portfolio Immune to the Second Covid Wave (Profit Hunter)

Apr 6, 2021

Rather than predicting the market, successful investing is more about preparing well and placing your bets accordingly.

An India Revival Stock I'm Bullish On... (Profit Hunter)

Apr 9, 2021

This could take India to the position of 3rd largest economy.

Why Did the Market Crash on Monday? (Fast Profits Daily)

Apr 13, 2021

In this video, I'll you what I think is the real reason behind yesterday's market crash.

A Unique Sector for Short-Term Profits (Fast Profits Daily)

Apr 12, 2021

This ignored sector could deliver big short-term profits.

More

India's #1 Trader
Reveals His Secrets

Secret To Increasing Your Trading Profits Today
Get this Special Report,
The Secret to Increasing Your Trading Profits Today, Now!
We will never sell or rent your email id.
Please read our Terms

INDIAN HOTELS SHARE PRICE


Apr 16, 2021 (Close)

TRACK INDIAN HOTELS

  • Track your investment in INDIAN HOTELS with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
  • Add To MyStocks

INDIAN HOTELS 5-YR ANALYSIS

COMPARE INDIAN HOTELS WITH

MARKET STATS