Axis Capital has shared its insights on the Indian hotel industry, initiating coverage on several stocks with optimistic recommendations:
- Indian Hotels: Initiated with a “Buy” rating and a target price of ₹976.
- Chalet Hotels: Initiated with a “Buy” rating and a target price of ₹1191.
- Juniper Hotels: Initiated with a “Buy” rating and a target price of ₹442.
- Lemon Tree Hotels: Initiated with an “Add” rating and a target price of ₹153.
Key highlights and industry insights:
- Prolonged industry upcycle: Axis Capital believes that the current upcycle in the Indian hotel industry has the potential to last longer, driven by structural factors.
- Demand and supply dynamics: Supply additions are forecasted at a 9% CAGR for FY24-FY27E, significantly lower than the expected 12% demand growth. This balance creates a favorable environment for hotel operators compared to the oversupply seen during the previous cycle (2008–2015).
- Drivers of hotel demand:
- Increased business travel due to stronger corporate earnings.
- Domestic travel growth fueled by higher disposable incomes.
- Rising wedding expenditures and MICE (Meetings, Incentives, Conferences, and Exhibitions) events.
- The return of foreign visitors.
- Re-rating of hotel stocks: The hotel industry has seen significant re-ratings over the past year, with Indian Hotels Company Limited (IHCL) leading the pack. However, other listed hotel stocks are yet to catch up, presenting attractive opportunities for investors.
Axis Capital’s report underscores the strong potential in the Indian hotel sector, driven by robust demand, limited supply, and favorable macroeconomic conditions.
Disclaimer: This article is for informational purposes only and should not be considered as financial advice. Please consult a financial advisor before making any investment decisions.
