Reuters Market Eye - J.P.Morgan maintained Indian Hotels at "neutral" with a September 2012 target price of 77 rupees but highlighted the hotel chain operator will benefit from a weaker rupee. A weaker rupee would make tariffs in U.S. dollar terms cheaper for foreign tourists, and help pricing power on a rupee basis for the operator of Taj hotels and resorts worldwide, J.P.Morgan said in a report dated on Thursday.
Tourists accounts for 60 percent of the demand in luxury hotels in India, J.P.Morgan estimates. J.P.Morgan added current valuations of enterprise value/room of 10 rupees per room are "attractive and significantly below replacement costs."
However, J.P.Morgan said it would need to see more improvement in the domestic economy and a turnaround at The Pierre, Indian Hotel's flagship luxury hotel in New York, before looking to upgrade the stock.