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C. Raja Rajeshwari

THE turnaround, increased occupancy rates and good future prospects are reasons for shareholders to hold on to the ITC Hotel stock, which trades at about Rs 80. Fresh exposures can be considered at lower levels as the stock has run up sharply over the past six months. ITC Hotels is 72 per cent ITC owned.

The industry has improved since last December and ITC Hotels' performance mirrors this. The company is one of the three leading hotel chains in the country.

Financials: For 2002-03, ITC Hotels' profit was Rs 0.57 crore, a turnaround from the loss of Rs 3.12 crore during 2001- 02. For 2003-04 first quarter, the company made a profit of Rs 59 lakh compared to a loss of Rs 2.28 crore in the corresponding previous quarter.

The improvement in business confidence and the increase in tourist inflow have augured well for the company. Leisure travel is also reviving with an increase in the disposable income of the domestic traveller. Being a prominent player in the leisure segment, ITC Hotels is set to cash in on this surge.

High occupancy rates in the off-peak season of May and June offer a positive outlook for the rest of the fiscal, as foreign tourist arrivals would perk up from October onwards.

Expansion plans: ITC Hotels is expanding through its subsidiaries. Fortune Park Hotels, which is a fully-owned subsidiary, plans to open hotels in Chennai and Bangalore. Recently, Fortune Park Hotels added properties at Tirupati, Hyderabad and Madurai to its portfolio and is setting up a hotel in Indore.

WelcomHeritage, a joint venture of ITC Hotels and Marudhar Hotels in Rajasthan, is setting up heritage properties in South and East India.

The company has entered into a tie-up with Windamere Hotel in Darjeeling for properties in the eastern region. WelcomHeritage now operates in Rajasthan, Himachal Pradesh, Uttaranchal, Madhya Pradesh and Jammu and Kashmir.

Outlook: In the long term, if ITC, its parent company, decides to increase its presence in the hotel business through fresh investments and/or acquisitions, the ITC Hotel stock should improve further. Taking into account ITC's balance-sheet and its cash reserves, large-scale acquisitions cannot be ruled out.

ITC Hotels has a portfolio of properties that is limited to India. In the light of this, the 14 per cent stake in EIH that ITC owns through group companies assumes significance. EIH has a considerable presence in the international market.

With 17.2 per cent of the Rs 30.21 crore equity in the hands of public, investors should factor in the ITC Hotels' stock's low liquidity.

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