Indian Hotels rallies 6% on heavy volumes, hits 20-month high

Shares of Indian Hotels rallied 6 per cent to hit a 20-month high of Rs 157.25 on the BSE in intra-day trade on Wednesday on the back of heavy volumes. The stock of the Tata Group company was trading at its highest level since November 2019. It touched a record high of Rs 164, on June 26, 2019.

In the past four trading days, the market price of Indian Hotels has surged 11 per cent after the company said that a special committee of the board approved raising up to Rs 250 crore on a private placement basis through non-convertible debentures (NCDs). The trading volumes on the counter nearly doubled with a combined 10.6 million equity shares changing hands on the NSE and BSE.

Indian Hotels Company is South Asia's largest hospitality company by market capitalization. It operates brands such as Taj, SeleQtions, Vivanta, and Ginger. The company has a portfolio of 196 hotels, including 40 under development globally across 4 continents, 12 countries and in over 80 locations.

In the past three months, Indian Hotels outperformed the market by gaining 41 per cent, as compared to 7 per cent rise in the S&P BSE Sensex.

In the January–March quarter (Q4FY21), Indian Hotels Company, South Asia’s largest hospitality company, had reported a positive Ebitda (earnings before interest, taxes, depreciation, and amortization) of Rs 83 crore, an increase of 118 per cent from December quarter (Q3FY21).

The management guided that though the domestic operations have witnessed traction, recovery in international business is commendable. Also, the company’s focus on being cost prudent will aid in Ebitda margin expansion, despite subdued net sales in near future. The company is hopeful of demand recovery in the US and the UK in the next three to four months with the situation now gradually coming under control.

“With international arrivals dropping at an alarming rate due to travel restrictions and advisories from time to time, the demand for hospitality is expected to arise mainly from the domestic sector. Within this sector, business travel has remained subdued and is being undertaken only for essential purposes or return to hometowns. As restrictions on movement were relaxed, the industry saw pent-up demand emerging from a sudden urge to travel to leisure destinations, mostly resorts, wellness centres, eco-tourism destinations and homestays within drivable distances,” Indian Hotels said in financial year 2020-21 (FY21) annual report.

Two things are certain. First, that guests’ preferences of accommodation and dining would steer towards reputed brands that embed hygiene and safety in their products and services. Second, the hospitality sector with its resilience will survive and adapt to the changing demands of hospitality in the years to come, the company said.