The Hindu Business Line : Indian Hotels: Check in

INVESTORS with a one- to two-year horizon can consider fresh exposures in Indian Hotels (which owns The Taj group of hotels). The stock trades at Rs 248 and holds room for appreciation. But investors should use any gains of 20 to 30 per cent to evaluate profit-booking opportunity.

With the boost in the leisure segment, Indian Hotels is well poised to cash in on this trend. The leisure hotels have delivered higher room rates in 2002-03 compared with its business and luxury divisions and this trend is set to continue. Its initiatives on balance sheet restructuring, asset-light ownership (with lesser focus on owning the hotels) and product extension (such as spa, wild life parks) would drive its growth in the next couple of years. Its major thrust on food and beverages has paid well in the past two years.

Its performance in the January-March quarter points to an emerging improvement in the industry scenario. This is despite the move to attract occupancy by offering lower average room rates (ARRs). The next two quarters are typically not peak ones for hotels. But the performance in the recent quarter suggests Indian Hotels may do better in these periods as compared to the previous fiscal.

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