Investment Idea

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Indian Hotels Company Limited

The Indian Hotels Company Limited (IHCL) and its subsidiaries bring together a group of brands and businesses that offer a fusion of warm Indian hospitality and world-class service.  Incorporated by the founder of the Tata Group, Jamshedji Tata, the Company opened its first hotel - The Taj Mahal Palace, in Bombay in 1903.  The hallmark of Indian hospitality, INDIAN HOTELS personifies tradition and warmth. With hotels ranging across iconic locations, living palaces, exotic resorts and scenic safaris, it delivers unmatched experiences and lasting memories for guests around the world.  A service culture that has been nourished over 116 years and practiced across several global destinations, IHCL is all about the heart behind the process.

IHCL is having presence in 12+ countries with 100 plus locations.  The company has 200+ Hotels, 400 plus Restaurants and more than 25000 Rooms.  There are more than 34000 employees working in the company.


FINANCIAL HIGHLIGHTS:                                                                                                                               (FY: 2019-20)

REVENUE: Rs. 4463.00 Cr.

EBITDA: Rs. 736.00 Cr.

NETT PROFIT: Rs. 350 Cr.

 Financials of first two quarters of FY 21 are not given as they are not comparable owing to pandemic effect on company’s working. Indian hotel is one of the most trusted name in hospitality industry in India and enjoying a distinguished name in the hotel industry.  The hotel industry has been one of the most effected segments presently due the spread of Covid-19 and as such IHCL has been undergoing through one of the worst phases in the recent times.  However, with the sign of improvement in economic activity in last couple of months, the performance is likely to improve to some extent in remaining two quarters of FY 21.  Some positive hopes are floating around regarding the vaccine and it is  likely that the same will start working by end of last quarter.  If everything goes well, we hope for a speedy recovery in tourism sector after two quarters of FY 2021- 22 and operations are likely to reach at pre covid-19 level some time in the middle of year 2021.

The valuations of the company at present are very low at current market price of Rs. 110/-.  The total market cap is around Rs.13000.00 Cr. which is far below the intrinsic value of the company.  IHCL has not only been enjoying a premium brand value but also having several fantastic properties in various parts of our country.  Staying in Taj group of hotels is a prestigious symbol in India and strong brand loyalty is attached with it making it far more distant from any other hospitality group. Investment in IHCL is strongly recommended on this auspicious occasion of Diwali and expecting a minimum 30% return by next Diwali. One can multiply its wealth with long time horizon of 3-5 years. Be a part of this prestigious group for future wealth creation. 

The Indian tourism and hospitality industry have emerged as one of the key drivers of growth among the services sector in India. Tourism in India has significant potential considering the rich cultural and historical heritage, variety in ecology and places of natural beauty spread across the country. According to WTTC, India ranked 10th among 185 countries in terms of travel & tourism’s total contribution to GDP in 2019. During 2019, contribution of travel & tourism to GDP was 6.8% of the total economy. (US$ 194.30 billion).  As per the projections, by 2029 the Indian tourism sector to grow with a CAGR of 6.7% to reach US$ 488 billion and accounting for 9.2% of the total economy. India is the most digitally advanced traveler nation in terms of digital tools being used for planning, booking, and experiencing a journey. India’s rising middle class and increasing disposable income has supported the growth of domestic and outbound tourism. India’s travel and tourism industry has huge growth potential. The industry is also looking forward to the expansion of e-Visa scheme, which is expected to double the tourist inflow in India.

 WISHING ALL MY READERS A VERY HAPPY DIWALI AND PROSPEROUS NEW YEAR

-Rajendra Jhanwar

 

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