Get Details: First Stock to Potentially Accumulate Rs 7 Crore Long-term Wealth
Several niche offerings such as medical tourism and eco-tourism are expected to create more demand for the hotel sector.
The hotel industry is highly cyclical in nature, linked to economic growth. The pandemic and its impact on the sector reflect the fragility of the industry to external developments.
There is a further element of demand and supply that could affect the viability of running a hotel at a particular place. Unlike commodities or fast-moving consumer goods that could be moved around for consumption at any place, the demand for hotel is based on location.
Considering these factors, the decision to invest in the hotel sector should be based on a combination of top down (starting from macroeconomic perspective) and bottom up approach (focusing on company and stock specific fundamentals and valuations).
The details of listed hotel companies can be found on the NSE and BSE website. However, the overload of financial information on these websites can be overwhelming.
For a more direct and concise view of this information, you can check out our list of hotel stocks.
Taj GVK, East India Hotels and Advani Hotels were the top hotel performers over the last 5 years in terms of sales and profit growth.
The growth of East India Hotels (EIH) can be attributed to the vast experience of its promoters, the strong 'Oberoi' brand name and its established market presence in the Indian hospitality sector whereas the growth of Taj GVK can be attributed to its considerable operational flexibility with Indian Hotels Company (IHCL) as the hotel operator and also having access to the established premium brands of the latter.
To know which other companies performed well over the last 5 years, check out our entire list of top performers.
There is no consistent trend of dividends across the industry, with different companies having different dividend policies.
That said, you can check out our list of top hotel stocks offering high dividend yields here.
RoCE is an important tool to assess a company's potential to be a quality investment by determining how well the management is able to allocate capital for future growth. A RoCE of above 15% is considered decent for companies that are in an expansionary phase.
Advani Hotels, Mahindra Holidays and Oriental Hotels are the top hotel stocks right now on the Return on Capital Employed (RoCE) parameter.
To know which other hotel stocks offer great return on capital employed, you can check out the top hotel stocks offering the best RoCE here.
Investing in stocks requires careful analysis of financial and qualitative data to find out a company's true worth. These parameters include management quality, debt to equity ratio, profitability and return ratios. However, an easier way to find out about a company's performance is to look at its financial ratios.
Two commonly used financial ratios used in the valuation of stocks are -
Price to Earnings Ratio (P/E) - It compares the company's stock price with its earnings per share. The higher the P/E ratio, the more expensive the stock.
To find stocks with favorable P/E Ratios, check out our list of hotel stocks according to their P/E Ratios
Price to Book Value Ratio (P/BV) - It compares a firm's market capitalization to its book value. A high P/BV indicates markets believe the company's assets to be undervalued and vice versa.
To find stocks with favorable P/BV Ratios, check out our list of hotel stocks according to their P/BV Ratios
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Here's an analysis of the annual report of TAJ GVK for 2019-20. It includes a full income statement, balance sheet and cash flow analysis of TAJ GVK. Also includes updates on the valuation of TAJ GVK.
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.
For the quarter ended June 2020, MAHINDRA HOLIDAYS has posted a net profit of Rs 268 m (up 47.4% YoY). Sales on the other hand came in at Rs 2 bn (down 29.4% YoY). Read on for a complete analysis of MAHINDRA HOLIDAYS's quarterly results.
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.
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