fm assgnmnt of ihcl,roll.no

8/8/2019 Fm Assgnmnt of IHCL,ROLL.no

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Fundamental analysis of Indian hotels company limited

Company introduction

Indian Hotels Limited operates the largest hotel chain in India under the brand Taj Hotels,

Palaces & Resorts .Indian Hotels Company (IHL), belonging to Indias prestigious Tata Group,

operates one of the largest hotel chain in South Asia under the brand Taj Hotels Resorts and

Palaces. Its history begins more than 100 years back when the Groups founder, Jamsetji N Tata,

opened the first hotel, the Taj Mahal Palace and Tower, in Mumbai in the year 1903.

Taj Hotels Resort and Palaces comprises more than 60 hotels in 45 locations across India with an

additional 15 international hotels in the Malaysia, United Kingdom, United States of America,

Bhutan, Sri Lanka, Africa, the Middle East and Australia Spanning the length and breadth of the

country, gracing important industrial towns and cities, beaches, hill stations, historical and

pilgrim centres and wildlife destinations.

IHCL operate in the luxury, premium, mid-market and value segments of the market through the

following:

Taj (luxury full-service hotels, resorts and palaces) is our flagship brand for the worlds mostdiscerning travelers seeking authentic experiences given that luxury is a way of life to which

they are accustomed.

Taj Exotica is our resort and spa brand found in the most exotic and relaxing locales of the

world. The properties are defined by the privacy and intimacy they provide. The hotels are

clearly differentiated by their product philosophy and service design.

Taj Safaris are wildlife lodges that allow travelers to experience the unparalleled beauty of the

Indian jungle amidst luxurious surroundings. They offer Indias first and only wildlife luxury

lodge circuit.

Upper Upscale Hotels (full-service hotels and resorts) provide a new generation of travelers a

contemporary and creative lifestyle.


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The Gateway Hotel (upscale/mid-market full service hotels and resorts) is a pan-India network

of hotels and resorts that offers business and leisure travelers a hotel designed, keeping themodern nomad in mind.ative hospitality experience that matches their work-hard play-hard

lifestyles.

Ginger (economy hotels) is IHCLs revolutionary concept in hospitality for the value segment.

Intelligently designed facilities, consistency and affordability are hallmarks of this brand targeted

at travelers who value simplicity and self-service.

Taj hotels in India

Agra,aehemdabad,Aurangabad,banglore,chandigrah,Calicut,chenni,cochin,goa,Gwalior,haydraba

d,jaipur,jodhpur,Kolkata,lukhanow,Mumbai,new delhi,pune,Visakhapatnam etc.

Environmental analysis

Effect of GDP

The travel and hospitality industry continues to be the sector, which has largely profited from thefast growing economy of India. Though FY09 had been tough year with tourist inflow decliningby 4% YoY on account of economic slowdown and terror attacks, it has grown at a CAGR of13% in the past 5 years. Higher GDP growth, rising income, demand supply mismatch and

strong government focus would continue to aid the industry. Now the GDP growth rate of Indiais 8.8%.and due to the attak of terrorism on last year on taj hotel its stock price fell down. Thecompanys turnover in the year 2010 is 4478.50(in lakhs).The company which had been enjoyinga healthy growth in revenues till 2001, faced a downturn in revenues and corresponding profitssince 2002 due to unforeseen events of actsof terror and SARS epidemic which resulted in a fall in number of global tourists

However the situation has become favourable since 2003. As a result of the "Incredible India"campaign started by the Indian government, India as a destination is gaining popularity amongleisure and business tourists resulting in an increase in foreign tourist arrival in India. Now dueto growth of GDP is stock price value increased.


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Effect of FDI

(FDI) is a measure of foreign ownership of productive assets, such as factories, mines and land.Increasing foreign investment can be used as one measure of growing economic globalization.The Indian HOTEL INDUSTRY is growing at a rate of 15 percent annually. Which createaffect on the price of stock of Indian hotel company and due to this its stock price increased to2.2% .

Effect of FII

Foreign institutional investors (FIIs) poured inflows heavily to bet on the India growth story.As

per data released by the Securities and Exchange board of India (SEBI), FIIs invested US$2055.74 million in equities between July 1 and July 21, 2010, and US$ 1566.98 million in debtbetween the same period.and due to FII the stock price of Indian hotel also get increased due toincrease in the no. of foreign institutional investors.

GOVT. expenditure

The government has realized the importance of tourism and has proposed a budget of Rs. 540crore for the development of the industry. The priority is being given to the development of the

infrastructure and of new tourist destinations and circuits. The Department of Tourism (DOT)has already started the "Incredible India" campaign for the promotion of tourism in India.it alsoincreasd the stock value of Indian hotel company ltd.

Saving and investment

Indian Hotels Co. Ltd. (IHCL) reported a 16% YoY growth in revenues to ~Rs3.4bn forQ3FY08. Due to the onset of the peak season, revenue growth was driven by 15% YoYimprovement Orient Express Hotels: IHCL acquired a 11% stake in Orient Express Hotels Ltd(OEHL), a NYSE listed company, for ~USD233mn in Sep07. This was followed by anadditional purchase of ~0.6% stake for ~USD14mn. Rights Issue: IHCL has secured approvals toraise capital through 2 simultaneous rights issues. The first entails issue of 1 equity share forevery 5 shares held at Rs70/ share. IHCL would garner Rs8.4bn through this, diluting its equityto Rs723mn.this news increased the price value of stock


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Budget deficit

The amount by which a government, company, or individual's spending exceeds its income over

a particular period of time. also called deficit or deficit spending. opposite of budget surplus.

The budgetary impact on hospitality was not understood clearly by many until much later.Budget 2010-11 gives a tax deduction for new two-star hotels that are to be opened on or after

April 1, 2010. The deduction under Section 35AD of the Income Tax Act will be up to 100

percent of the capital expenditure (other than investing in financial instruments, land, and

goodwill ) incurred for the purpose of building and operating a new hotel of two-star or higher

category.

The impact of this new provision will be huge on the profitability of hospitality sector companies

.budget deficit create high effect in the stock price of company in this particular. Kerala's 2010-

2011 Budget Leaves Behind A Deficit Of Rs. 3630-crore .... The hotel industry which was

going down due to economic downfall.

Infalation

In economics, inflation is a rise in the general level of prices of goods and services in aneconomy over a period of time.When the price level rises, each unit of currency buys fewergoods and services; consequently, inflation is also an erosion in the purchasing power of money a loss of real value in the internal medium of exchange and unit of account in the economy. Anincrease in the general level of prices implies a decrease in the purchasing power of the currency.That is, when the general level of prices rises, each monetary unit buys fewer goods and

services.The effect of inflation is not distributed evenly in the economy, and as a consequencethere are hidden costs to some and benefits to others from this decrease in the purchasing powerof money.

Intrest rate

Company has to pay intrest rate to govt. on the income generated. Highly intrest rate deley theproject of company.and due to this it create negative impact on the stock price up to certain level.

Central bank monetary and fiscal policy

optimal choice of tax rate and public investment, when the public investment is highlyproductivity-enhancing, eliminates the effects of distortionary taxation and fully counterbalanceboth the direct and the fiscal-disciplining effects of opacity, on the level and variability ofinflation and output gap.central bank .lack of transperancy in central bank monetary and fiscalpolicy create negative impact on the stock price of IHCL.
http://www.investorwords.com/2400/income.htmlhttp://www.investorwords.com/2400/income.html


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BOP

INDIAs trade deficit during the first nine months of fiscal 2009-10 on a balance of payments

(BoP) basis was lower at US$ 89.51 bn compared with US$ 98.44 bn during the same period infiscal 2008-09. The trade deficit on a BoP basis in Q3 (US$ 30.72 billion) was, however, lessthan that in Q3 of 2008-09 (US$ 34.04 billion).

Industry analysis

Growth stage

Over the last decade and half the mad rush to India for business opportunities has intensified andelevated room rates and occupancy levels in India. Even budget hotels are charging USD 250 perday. The successful growth story of 'Hotel Industry in India' seconds only to China in AsiaPacific.

'Hotel Industry in India' have supply of 110,000 rooms. According to the tourism ministry, 4.4million tourists visited India last year and at current trend, demand will soar to 10 million in2010 to accommodate 350 million domestic travelers. The World Travel and Tourism Council,India, data says, India ranks 18th in business travel and will be among the top 5 in this decade.Sources estimate, demand is going to exceed supply by at least 100% over the next 2 years. Five-star hotels in metro cities allot same room, more than once a day to different guests, receivingalmost 24-hour rates from both guests against 6-8 hours usage. With demand-supply disparity,'Hotel India' room rates are most likely to rise 25% annually and occupancy to rise by 80%, overthe next two years.so the hotel industry is in growth stage in india.

Porters five force model


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Buyers

Premium segment is the buyers of Indian hotel industry whose income level is high.low lincome

level people cannot effort the cost of the hotel.mostly business man,in these days income level ofpeople increases so the no. of buyers increases day by day. Higher in metro cities due toincreasing room supply.

Suppliers

Suppliers are those who supply the raw materials to the company. Day by day suppliers no.areLimited due to higher competition, especially in the metros in the field of hotel industry there arelots of competitors in the field.like oberoi hotel,hayaat hotet, Park, Hindustan International orTrident.

Competitors

There are lots of competitors in the field of hotel industry like oberoi hotel,hayaat hotet, Park,Hindustan International or Trident. Competitors are Intense in metro cities, slowly picking up insecondary cities. Competition has picked up due to the entry of foreign hotel chains.

Threat of new entrants

Increasing competition:Several international majors like the Four Seasons, Shangri-La and

Aman Resorts are entering the Indian markets. Two other groups - the Carlson Group and theMarriott chain - are also looking forward to join this race. This will increase the competition forthe existing Indian hotel majors.

Company analysis

Earning ratio


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P/E ratio

IHCL oberoi hayaat park

10-

Mar10-

Mar10-

Mar10-

Mar

Price Earning (P/E) 52.32 27.51 20.95 19.47

Price to Book Value

( P/BV) 37.22 2.06 4.11 2.95

Price/Cash EPS

(P/CEPS) 3.56 2.71 2.2 1.76

EV/EBIDTA 20.31 4.91 8.24 5.18

Market Cap/Sales 4.93 3.2 2.43 1.03

P/E ratio is ratio of a companys current share price compared to its per share earnings.When we

compare the p/e ratio of its competitors i.e.IHCL has 52.32 and Oberoi has 27.51which shows

that IHCL share holders are earning more than Oberoi so there is scope of more growth in

earnings of the stock of IHCL in future.P/E ratio of the IHCL is highest among all of its major

competitors

Share price of IHCL is Rs 1.00. Total no. of outstanding share is 309865692

. Market capitalization is 11.117.52 cr. Dividend yield % is 0.46 When we see the earning per

share of IHCL is 3.56 and 15.53 in 2010 . This show that the company performance is better

than in terms of profits. Company is doing well that is why the EPS has increased.

Company also has increased its book value means the companys assets has been increased. In

10 the book value of IHCL has increased its investments and advances. Companys total assets

have increased by 62 % so do its book value.

Market capitalization

The total rupees market value of all of a company's outstanding shares. Market capitalization is

calculated by multiplying a company's shares outstanding by the current market price of one

share. The investment community uses this figure to determining a company's size, as opposed to

sales or total asset figure

Currently the marke capitalization of IHCL is 4.23

Dividends

Mar'09

Mar'10


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Dividend Per Share -- 1.5

Dividend Payout Ratio -- 54.51.

IHCL has not paid dividend till 2009. Means that company has retained all the profits for it the

requirement of the capital for its growth policy. In future the dividend payout ratio would be

increased which will create the demand for the share increasing the price of share.

Dividend Yield

Hayyat park oberoi IHCL

Div. Yield

(%) 0.002 0.8 0.4 0.9

The dividend yield measures the amount of income received in proportion to the share price.

Here we can see that the dividend yield ratio of Yes bank is only 0.46614 Which is more then the

competitors.

The price value of stock price should be increased little bit that is Rs.5 per share.

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