Indian Hotels Shares Rise 3%, Hit Record Highs on Healthy Business Outlook

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Shares of Indian Hotels Corporation (IHCL) rose 3% to hit a record high of Rs 387.70 in intraday trade on Thursday, as expectations of a strong business outlook weighed on the market. The stock surpassed the previous high of Rs 377.80 touched on May 9, 2023.

IHCL is principally engaged in the business of owning, operating and managing hotels, palaces and resorts. The company has a diversified presence in the hospitality industry through brands such as Taj, Vivanta, SeleQtions and Ginger.

IHCL has outperformed the market over the past year, with shares surging more than 75%, compared with a 15% gain for the S&P BSE Sensex.

According to IHCL, the outlook for the Indian hotel industry in 2023 remains positive.

“Factors in favour of the Indian hospitality sector are favourable macroeconomic conditions, with GDP growth above 6 per cent, superior performance of the service sector in the Indian economy, easing concerns over COVID-19, a continuation of domestic infrastructure development projects, aviation and Growth in rail passenger traffic and rising demand for branded rooms outweighed modest growth in the supply of these rooms to provide long-term sustainable demand,” management said.

Additionally, management said the industry has learned to deal with volatility and adopt a leaner cost structure, which has helped improve profitability. They expect the sector’s growth to be largely driven by domestic demand, which is expected to remain strong in FY23-24 as international tourism sees green shoots of recovery and provides room for further growth in demand.

With the improved outlook, the company is also focusing on improving efficiency through cost optimisation.

Analysts believe that the recovery of foreign tourists, the wedding season, and the G20 summit in 2023 will further stimulate room demand in leisure and business hotels.

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