Edelweiss - International Travel House
Sunil
The USD 53.5 bn Indian tourism industry (2006) is slated to grow to USD 128 bn by 2016 (Source: World Travel & Tourism Council (WTTC)), led by Government of India's (GoI's) tourism promotion efforts through 'Incredible India' campaign, strong economic growth, rising income levels, consumerism, and increasing business and domestic travel. International Travel House Ltd (ITHL) is amongst the few end to end providers in the industry and is well poised to benefit from the current boom. Besides providing car rentals, air-line booking, tour packages and various other services, ITHL has its travel desk at every ITC hotel thus having its presence across the entire value chain.
We expect the Indian car rental market to grow at 23-25% over the next three –five years. This augurs well for ITHL as it is amongst the top five players in this industry and would derive 72% (in FY09E) of its commission from this business. Given the booming tourism sector, the ITC pedigree, launch of portal, and strong focus on the car rental industry, the prospects of ITHL appear extremely bright. We expect ITHL's revenues and profits to grow at 29% and 33% CAGR, respectively, between FY07E and FY09E. At the CMP of INR 143, the stock trades at 12.6x FY07E EPS of INR 11.3 and 9.3x FY08E EPS of INR 15.3.We initiate coverage with a 'BUY' recommendation.
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