Equity Alert: Hotel shares up on Q1 expectations; FY09 seen bearish

[K.Karthik Raja]

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Equity Alert: Hotel shares up on Q1 expectations; FY09 seen bearish
MUMBAI--1:16PM--Hotel shares were up 1-5% despite media reports of
a
20-30% likely fall in average room rates.
Analysts said the shares are up due to expectations the players
will
clock a 15-20% year-on-year rise in Apr-Jun net profit as their
revenue is
likely to increase 10-12%.
However, a fresh supply of rooms by December, and downturn in
travel and
tourism industry are seen hitting the pricing power of hotels, which
will
exert pressure on margins.
Outlook for 2008-09 (Apr-Mar) is bearish, and several brokerage
houses such
as Citigroup and B&K Securities have already cut FY09 earnings
estimates and
downgraded a few stocks in the sector.
"ARRs are being cut in markets such as Bangalore and Hyderabad
where
fresh supply will be commissioned in six months, but rates in Mumbai
and
Delhi are seen firm," said an analyst with a domestic brokerage house.
Most analysts are still bullish on stocks such as Indian Hotels
and EIH
Ltd, which have substantial exposure to Mumbai and Delhi.
Indian Hotels was up 1.6% at 87.80 rupees, Hotel Leelaventure 3.2%
at 31
rupees, Asian Hotels 1.8% at 489 rupees, and Royal Orchid 0.7% at
89.50
rupees.
Kamat Hotels India was up 4.2% at 113 rupees. This predominantly
western
India based hotel chain expects room rates to go up 15% this year.
EIH Ltd was the only laggard, down 4.4% at 124.50 rupees.