With India opening its doors to foreign tourists now and revenge spending working up its magic, demand is expected to improve, thereby benefiting hotel stocks.
India has allowed fully vaccinated arrivals from 99 countries to travel quarantine-free in the country.
Even as the hotel industry back home has seen a sharp bounce back in revenues during Q2 FY22, mainly supported by domestic tourism, the recent development of allowing foreign tourists is seen helping the sector to return to profitability over the next couple of years.
As per Tourism Ministry data, in 2020, foreign tourist arrivals fell a whopping 75 percent to a 20 year low of 2.74 million versus 10.93 million in 2019. Already India's share of receipts from international tourists, while rising past 6 years, is still abysmally low at a mere 1.3 percent of the world total, pointed out Dick Mody, Founder and CEO of Ethical Advisers.
“Mind you this includes NRIs visiting India. You can thus imagine that not only a huge REBOUND to normal levels of tourist arrivals but also tremendous potential to increase the market share,” he added.
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This has prompted Mody to be super confident that leisure, travel and hotel stocks will outperform broader markets handsomely in 2022.
Further, there has been a steady rise in attendance in offices and an uptick in corporate travel. This along with increasing demand during the festive and wedding season has offered comfort to market participants.
“Post the unlocking, Indian hotel stocks have rallied 30-40 percent in the last 3-4 months anticipating a strong recovery in the broader economy and travel. The sector has got rerated from 18-20 times PE multiples to 30 times PE multiples,” Hemang Kapasi, Head of Equities, Sanctum Wealth said.
Kapasi said that although the re-opening of the economy is priced in, as occupancy levels increase due to pick up in business and leisure travel, and earnings come in stronger, he sees a further upside in hotel stocks.
“We believe that investment at current juncture should still deliver healthy returns of 15-20 percent over the next 12 months,” said Kapasi.
Here are some stock recommendations by technical chartists that could make decent returns for an investor:
Chalet Hotels | This stock could be accumulated at current levels. It could rally up to Rs 320-340 which implies an upside of 20-27 percent from the current level of Rs 267. (Swapneel Mantri, technical analyst at Institutional Desk, Sushil Finance)
Lemon Tree Hotels | This stock could be bought on dip. Buying zone for the stock is around Rs 48-50 and it could gain more up to Rs 60 which would mean an upside of 20-25 percent. (Swapneel Mantri, technical analyst at Institutional Desk, Sushil Finance)
EIH | One could add this stock in their portfolio when there is a dip to around Rs 135 level, after which the stock is expected to climb up to Rs 170-180 implying a 26-33 percent gain. (Arpan Shah, Senior Research Analyst at Monarch Networth Capital)
Taj GVK Hotels & Resorts | One can expect some correction in the stock in the near term towards Rs 135 level, where investors can look to add this stock in their portfolio. It could rally up to Rs 165-180, generating a 22-33 percent return. (Arpan Shah, Senior Research Analyst at Monarch Networth Capital)
Indian Hotels Co | Bias in the stock is positive but one would have to wait for an entry point. Once the stock surpasses the breakout level of Rs 220, it could continue to rally up to Rs 265 which means an over 20 percent upside. (Kkunal Parar, Vice-President Research at Choice Broking)
Oriental Hotels | A fall of up to Rs 37 could present a good buying opportunity. The stock is expected to continue marching north towards Rs 46, suggesting a 24 percent upside. (Kkunal Parar, Vice-President Research at Choice Broking)
(Edited by : Ajay Vaishnav)
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