Indian Hotels Co. Ltd (IHCL), owner of the Taj Group of Hotels, said net profit for the quarter ended 30 June rose 39% to Rs54.8 crore from Rs39.4 crore in the corresponding period last year.
Sales rose 20% to Rs346.5 crore from Rs289.4 crore in the same quarter in the year-ago period as higher room rents, strong occupancy rates, and growth in the company’s food and beverage business drove revenues.
In calculating growth, IHCL restated earnings for the quarter ended June 2006 to account for the amalgamation of five hotel companies, including Taj Lands End Ltd and Gateway Hotels and Getaway Resorts Ltd into the parent company.
“It is creditable that the company has managed to maintain margins above the 30% level in the lean season,” said Amol Rao, research analyst, Infinity.com Financial Securities Ltd, a Mumbai-based brokerage firm. “Going forward, the real test would be to see the company maintain similar margins in Q2 (second quarter), which is the leanest period of the hospitality calendar,” he added.
The company said it would pursue an aggressive growth agenda, including building new five-star hotels in Mumbai, Coimbatore and Bangalore; renovating the Falaknuma Palace in Hyderabad; and expanding the capacity at Taj Lands End in Mumbai. In addition, new budget Ginger hotels are under construction at seven locations across India, said the company. IHCL said it is looking at campuses of IT parks and have tied up with mall developers in Gujarat and Punjab for further expansion of the budget hotels.
IHCL hopes to raise Rs1,200 crore for projects over the next three years, including approved projects under implementation, expansion and renovation, and equity investment in subsidiary companies, said Anil Goel, chief financial officer, IHCL.
The company has informed the Bombay Stock Exchange (BSE) that its board of directors will meet on 13 August to consider various options for raising long-term finance for its capital expenditure and growth plans, including a rights issue to its shareholders.
IHCL is already the largest Indian hospitality company managing and operating 81 hotels and 9,901 rooms domestically and abroad.
A gap between demand and supply in the country’s hospitality sector over the last few years has led to strong profits and revenues for companies across the sector such as IHCL; ITC Ltd, a diversified company that owns a large hotel division; and EIH Ltd, the primary owner of the Oberoi Group of Hotels.
According to hospitality consultants HVS International, revenue per available room for five-star deluxe hotels in India increased about 117% to Rs5,289 in fiscal 2006 from fiscal 2002.
IHCL’s share price closed at Rs139.05, down 0.39%, on BSE on Tuesday.