Top Hospitality Stocks: With the curb in covid related lockdowns and the restrictions in movement across cities and countries being lifted, the hospitality sector can take a sigh of relief.
The companies have been heavily affected by this. However, with the economy around the world opening up, the tourism and hospitality sector is picking up again.
In this article, we will take a look at top stocks in the hospitality sector.
Industry overview
The hospitality business in the country has been severely impacted by the pandemic and the restrictions in the past two years.
Lockdowns and travel restrictions practically halted the business in the travel sector. This is the reason for all the hospitality stocks made a loss in the last 2 years.
Foreign tourist arrivals (FTAs) in India, as per statistics provided by the Ministry of Tourism, averages at more than 10 million a year. During FY 2020, FTAs numbered 2.68 million compared to 10.93 million in 2019.
The tourism ministry is in the process of deciding whether the hospitality sector should be granted Infrastructure status or not.
This status will bring in benefits such as incentives and relaxations, including cheaper loans, tax concessions, avail external borrowings, and increased flow of capital. It also helps the sector attract investments.
Policies and initiatives, along with the reopening of the economy are expected to boost the sector. This may lead to the companies reaching their pre-covid number in terms of revenue and profitability.
Top Stocks in the Hospitality Sector:
1. Indian Hotels Company Limited
The Indian Hotels Company Limited (IHCL) is an Indian hospitality company that manages a portfolio of hotels, resorts, jungle safaris, palaces, spas, and in-flight catering services. The company is being managed as a subsidiary of India’s Tata Group.
The hospitality chain is operational in 12+ countries with 221 hotels and 400+ hotels.
Along with that, the company started several new ventures. One of them is Qmin, a food delivery platform to bring culinary experiences to customers’ homes.
From their Hospitality@Home services, people can order some of the finest luxury products from their iconic city hotels.
The revenue dropped by 65% from PY and stood at Rs 1,575.16 Cr in FY21. The company reported a net loss of Rs 720.11 Cr in the same year.
The cash flows of the company have been affected which has resulted in negative margin ratios. On the bright side, it was able to bring down its costs by 45% by renegotiating the contracts, outsourcing certain functions.
The promoter’s holding has increased on a quarterly basis with zero shares pledged.
| Face Value (₹): | 1 | Dividend Yield (%): | 0.19 |
| Market Cap (Cr): | 26,639 | Net Profit Margin: | -44.07 |
| EPS (TTM) (₹): | -3 | Debt to Equity: | 0.68 |
| Stock P/E (TTM): | 0 | Current Ratio | 0.39 |
| ROE (%): | -17.34 | Promoter’s Holdings (%): | 41.02 |
2. EIH Ltd (The Oberoi Group)
The Oberoi Group is a luxury hotel group that was founded in 1934. The two major holding companies of The Oberoi Group are EIH Ltd and EIH Associated Hotels (formerly East India Hotels).
The company owns and operates 29 luxury hotels and 1 river cruise and 1 motor vessel in 7 countries, primarily under its Oberoi Hotels & Resorts and Trident brands.
Its services have extended to flight catering, airport lounges, travel and tour, car rentals, project management, and corporate air services.
The Oberoi group of hotels has seen a decline of 69% in their revenue to Rs 497.08 Cr in FY21. They posted a net loss of Rs 369.71 in the same year.
Generating cash flow has been an issue due to which the margins are negative. The company has low debt and zero promoters pledge which is a positive sign.
| Face Value (₹): | 2 | Dividend Yield (%): | 0 |
| Market Cap (Cr): | 7,739 | Net Profit Margin: | -63.3 |
| EPS (TTM) (₹): | -3 | Debt to Equity: | 0.11 |
| Stock P/E (TTM): | 0 | Current Ratio | 1.12 |
| ROE (%): | -10.08 | Promoter’s Holdings (%): | 35.74 |
3. Chalet Hotels Ltd.
Part of the K Raheja Corp Group, Chalet Hotels Limited is an owner, developer, asset manager, and operator of high-end hotels and a hotel-led mixed-use developer in key metro cities in India.
Chalet Hotels has 7 hotels present across 4 major cities in India. The brand portfolio includes JW Marriott, Westin, Four Points by Sheraton, Marriott Executive Apartments, and Novotel.
The luxury hotel group saw a 70% decline in its revenue in FY21 which amounted to Rs 294.39 Cr. Due to a drop in occupancy, it made a net loss of Rs 139.08 Cr.
Inability to generate revenue and cash flows has turned the margins negative. The promoter’s holding has remained constant in the last 5 quarters and the promoter’s pledge is at 32.01%.
| Face Value (₹): | 10 | Dividend Yield (%): | 0 |
| Market Cap (Cr): | 5,452 | Net Profit Margin: | -45.88 |
| EPS (TTM) (₹): | -5 | Debt to Equity: | 1.46 |
| Stock P/E (TTM): | 0 | Current Ratio | 0.73 |
| ROE (%): | -9.11 | Promoter’s Holdings (%): | 71.65 |
4. Lemon Tree Hotels Ltd
Lemon Tree Hotels is a hotel chain company, based in India. It is India’s largest chain of upscale hotels and resorts. It offers contemporary accommodation at reasonable rates and premium amenities and services.
The company operates under 7 brands: Aurika Hotels and Resorts, Lemon Tree Premier, Lemon Tree Hotels & Red Fox by Lemon Tree Hotels, Keys Prima, Keys Select, and Keys Lite. It has 84 operational hotels spread across 52 cities.
Lemon tree reported a decline of 63% at Rs 251.72 Cr in FY21. The net loss for the year was Rs 186.54 Cr. The cash flows have been negative and the debt of the company is rising.
Promoters have increased their pledge percentage from 20.75 in Sept 21 quarter to 29.39 in Dec 21 quarter.
| Face Value (₹): | 10 | Dividend Yield (%): | 0 |
| Market Cap (Cr): | 4,278 | Net Profit Margin: | -72.52 |
| EPS (TTM) (₹): | -1 | Debt to Equity: | 1.85 |
| Stock P/E (TTM): | 0 | Current Ratio | 0.78 |
| ROE (%): | -19.27 | Promoter’s Holdings (%): | 25.88 |
5. Mahindra Holidays & Resorts India Ltd.
Mahindra Holidays & Resorts India Ltd. (MHRIL), is a part of the Leisure and Hospitality sector of the Mahindra Group. It is engaged in the business of resorts, hotels, vacation facilities, leisure activities, and related ancillary activities.
As of March 31, 2012, the Company had 143,258 memberships. Other products include Jiyo Life-Lifetime Holidays, Club Mahindra Fundays, club Mahindra Travel, Mahindra Homestays, and Zest my kinda breaks.
The company’s revenue declined by 25% to Rs 1,729.96 Cr in FY21 while they reported a net loss of Rs 13.08 Cr. The company has high debt which resulted in high-interest payments.
This added to the already declining cash flow position of the company. The promoter’s pledge is zero.
| Face Value (₹): | 10 | Dividend Yield (%): | 0 |
| Market Cap (Cr): | 4,184 | Net Profit Margin: | -0.81 |
| EPS (TTM) (₹): | 2 | Debt to Equity: | -1.25 |
| Stock P/E (TTM): | 101.77 | Current Ratio | 1.74 |
| ROE (%): | 0 | Promoter’s Holdings (%): | 67.22 |
In closing
In 2020, the travel & tourism industry’s contribution to the GDP was US$ 121.9 billion. This data is expected to reach US$ 512 billion by 2028.
This gives an opportunity to not only companies but also investors to make a decent earning from the sector. However, the emergence of new variants of covid and its associated restriction still remains a threat.
That’s all for this article on Top hospitality stocks in India. Happy Investing! Have you invested in any of the hospitality stocks? Let us know in the comments below!
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