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MarketScreener Homepage  >  Equities  >  MUMBAI STOCK EXCHANGE  >  The Indian Hotels Company Limited    500850   INE053A01029

THE INDIAN HOTELS COMPANY LIMITED

(500850)
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Indian Hospitality Stocks Surge on Government Tax Cuts

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09/23/2019 | 03:01am EDT

By Saurabh Chaturvedi

Shares of Indian hospitality groups surged on Monday adding billions of dollars to their market cap after the government's decision to lower the goods-and-services tax on the sector last week.

ITC Ltd and Tata Group-owned operator of Indian Hotels Co. added a combined $3.40 billion to their market capitalization in the early hours of trading. Shares of ITC gained 8.3% at 257.50 Indian rupees ($3.62) while Tata Group-owned operator of Indian Hotels Co. surged 8.7% to INR161.15.

Several other hospitality stocks were also higher with Lemon Tree Hotels Ltd. up 9.6% at INR58.95, and Oriental Hotels Ltd. 6.8% higher at INR42.30.

The country's GST Council, headed by the federal finance minister to review the GST rates, on late-Friday announced several changes including rationalization of the GST rates for the hospitality sector.

The panel capped the highest GST rates on hotel room tariffs at 18% from 28% at present, and trimmed the tax on outdoor catering services. The tax cuts would be effective from Oct 1.

The move is expected to boost tourism and help the hospitality sector amid the economic slowdown.

The national elections and suspension of Jet Airways' flights earlier this year dented earnings of the local hotel operators, brokerage Motilal Oswal said in a report.

The decision to lower taxes will help improve demand ahead of the festive and year-end holiday period, and rev up corporate travel demand, it said.

However, the Federation of Hotel and Restaurant Associations of India, a hospitality-sector-focused industry body said the decision was only the "first step."

"The government should consider capping the maximum tax to 12%-15% on hotel tariffs to attract tourists. Not only international, but our domestic tourists are going to Thailand, Sri Lanka or Vietnam partly because of the high tax rate. We need to lower the tax further to get the competitive edge," Gurbaxish Singh Kohli, vice president of the Federation told The Wall Street Journal.

Write to Saurabh Chaturvedi at saurabh.chaturvedi@wsj.com

Stocks mentioned in the article
ChangeLast1st jan.
BRITISH AMERICAN TOBACCO PLC -5.32% 2588 Delayed Quote.-19.91%
ITC LIMITED 4.35% 163.2 End-of-day quote.-34.20%
LEMON TREE HOTELS LTD End-of-day quote.
MOTILAL OSWAL FINANCIAL SERVICES LIMITED -4.32% 519.8 End-of-day quote.-28.47%
ORIENTAL HOTELS LIMITED 0.32% 15.55 End-of-day quote.0.32%
THE INDIAN HOTELS COMPANY LIMITED 3.08% 76.95 End-of-day quote.-2.59%
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Financials (INR)
Sales 2020 47 232 M
EBIT 2020 6 627 M
Net income 2020 3 625 M
Debt 2020 35 322 M
Yield 2020 0,86%
P/E ratio 2020 25,4x
P/E ratio 2021 22,2x
EV / Sales2020 2,66x
EV / Sales2021 2,45x
Capitalization 90 205 M
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Mean consensus BUY
Number of Analysts 13
Average target price 180,58  INR
Last Close Price 75,85  INR
Spread / Highest target 211%
Spread / Average Target 138%
Spread / Lowest Target 68,8%
EPS Revisions
Managers
NameTitle
Puneet Chhatwal Chief Executive Officer, Director & MD
Natarajan Chandrasekaran Chairman
Uday Narain Chief Operating Officer
Giridhar Sanjeevi Chief Financial Officer & Executive Vice President
Deepak Shantilal Parekh Independent Non-Executive Director
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ACCOR-37.10%7 508