Indian Hotels Company

Scrip Has Given Around 37% Returns In The Past 6 Mnths Vis-À-Vis Sensex’s 30%
INDIAN Hotels has beaten the Sensex by a fair margin in the past six months. The company’s stock has given around 37% returns in the period, while the Sensex has managed around 30%. Even on a three-month basis, the company has beaten the Sensex. It posted returns of close to 11% while the Sensex managed returns of just 8%.

The hospitality industry appears to be on a revival course with the impact of the global slowdown and terrorists attacks in Mumbai now fading.

Against this backdrop, segment leader — Indian Hotels Company — may well be on track to see a positive trend in its sales and net profit in the third quarter.

The company, in line with expectations, showed a declining trend in its sales and profit for the September quarter. For the September quarter, the company saw a decline of 22% and 76% in its sales and profit respectively in comparison to its September quarter numbers for last year. IHC’s profit and sales for this quarter were Rs 11.87 and Rs 285.92 crore.

Low seasonality and the global economic slowdown pulled down the company’s profit and sales. These numbers were in line with the industry-wide trend. For instance, EIH registered a net loss of Rs 9 crore in September 2009 quarter against a profit of Rs 31 crore during the same period last year.

IHC should be able to register good sales in the third quarter of this year. On a quarter-on-quarter (q-o-q) basis, this year’s December and March quarter will be better than the numbers for the corresponding quarter last year.

In the December 2008 quarter, IHC reported revenues and profit of Rs 456 and Rs 83 crore respectively, which fell to Rs 332 and Rs 38.3 crore in March 2009 quarter.

The company successfully entered into a land deal with ‘Delhi Metro Rail Corporation’ for setting up a 400-room 5-star hotel in Dwarka, New Delhi. During the year so far, IHC has added four luxury properties — Vivanta by Taj, Bangalore, Taj Mount Road at Chennai and Taj Residency at Thiruvananthapuram. Besides, the company commenced operations of seven new ‘Ginger’ hotels in New Delhi, Panaji, Ludhiana, Ahmedabad, Mangalore and Durg. The Ginger brand is now present in 19 cities.

The December and the March quarter will be better (seasonality factor) for the company, considering the fact that last year was especially bad. More so, room rates, which have almost halved from their peak rates, are also bound to rise.