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Monday, March 3, 2008

Indian Hotel Company - Multi Bagger


Indian Hotel Company : BSE ID : 500850 NSE ID : INDHOTEL Reco Price Rs. 125.30 CMP: Rs.124.90 (Loss 0.32%)

With high land and commodity prices, the asset creation currently is happening at much higher prices, which will benefit existing players like Indian Hotels since it would make their business more competitive.

The Indian Hotels Company Ltd. (Indian Hotels) is the largest operator and manager of hotels, palaces and resorts primarily in India in the Luxury, Business, and Leisure segments and owns the ‘TAJ’ brand.

The Taj Group operates a total of 84 hotels with over 10,000 rooms. The Taj Group has a significant geographical spread of hotels in India, having properties in the major cities and large towns in India as well as in some of the key leisure destinations in South Asia. In the recent past the Company, through its wholly owned subsidiaries, has acquired hotels in New York, Sydney, Boston and San Francisco. The Company has majority ownership interests through subsidiaries in 16 hotels and resorts with 2,105 rooms and has minority interests in 29 hotels (amounting to 3,157 rooms). In addition, the Taj Group manages a total of 15 hotels, palaces and resorts in India and internationally pursuant to management contracts for third party owners (amounting to 1,481 rooms).

The Taj Group classifies its business divisions by the quality of the property, the range of services, and the guests it targets. Accordingly, the Taj Group has classified its hotel properties under various divisions as Luxury India, Luxury International, Business, Leisure and Ginger, which account for 27.16%, 13.62%, 29.97%, 20.35% and 8.90% of total rooms of the Taj Group, respectively. The Company derives the majority of its revenue from the Luxury India division. The Company is focused on the high end (five-star deluxe) Luxury India and Luxury International divisions of the hotel market while maintaining a significant presence in the Business and Leisure divisions.

In order to pursue opportunities in the “value-for-money” segment, the Company, through its wholly owned subsidiary, has launched “Ginger” brand of hotels catering to budget travelers. Currently, nine Ginger hotels are operational at various locations. The Company has also entered into a joint venture agreement with CC Africa and Cigen Corporation to promote wild life tourism in India and has two resorts, one each in Bandhavgarh and Pench in the state of Madhya Pradesh.

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