Hotel Leelaventure, TAJGVK, Lemon Tree jump up to 15% on GST rate cut hopes

Shares of hotel companies rallied by up to 15 per cent on the BSE in the early morning trade on Wednesday after reports said the Goods and Services Tax (GST) Council could cut rates for five-star hotels to provide relief to the hospitality industry. The Council is scheduled to meet on Friday, September 20.

Among individual stocks, Hotel Leela Venture and TAJGVK Hotels & Resorts jumped 15 per cent and 11 per cent, respectively in the intra-day trade so far. Meawhile, Royal Orchid Hotels, EIH Associated Hotels, Oriental Hotels, EIH, Lemon Tree Hotels and Indian Hotels were up between 3 per cent and 5 per cent on the BSE. In comparison, the S&P BSE Sensex was up 0.45 per cent at 36,645 points at 09:29 am.

The GST Council is likely rationalise rates for five-star hotels at its next meeting, holding out hopes for a boost to the tourism industry, a Business Standard report said. The fitment panel, comprising Central and state officials, have recommended a rate cut for outdoor catering and rate rationalisation for match sticks in its final agenda circulated to the council members, the report added. CLICK HERE TO READ FULL REPORT

Motilal Oswal Financial Services (MOFSL) has a ‘buy’ rating on Lemon Tree Hotels as the brokerage firm believes the company’s growth should mainly be driven by the recently commenced/upcoming hotels in high demand and high Average Room Rate (ARR) markets of Pune, Mumbai, Kolkata and Udaipur.

“H2 (October-March) is a seasonally strong period for hotels. Nearly 70-75 per cent of yearly profits of the hotel sector come in H2 and the December 2019 quarter would be an early indication of that. Even a small miss on growth expectations during H2 could hurt valuations, ” Amit Agarwal, an analyst with Nirmal Bang Securities, says. CLICK HERE TO READ FULL REPORT