Indian Hotel Recent Move to Realign - Boom-Boom Opportunity For Investors

Recently Indian Hotel Ltd, a group company of Tata Group is in news for all good reasons. Company came back to black with good profitability and revenue number during March 2016 quarter and it is expected that they will be coming out with extremely good number for April-June 2016 quarter. The company equity price is trading around 131 INR which takes its market capitalization of around $1.9 Bn with a debt level of around $600. It is expected that the debt level will go down by 25% post Taj Boston sellout at $125 Mn and Samsara Properties Ltd sellout at $49.57 Mn. It will help Indian Hotel to reduce the financing cost which will be EBIT positive and subsequently higher EPS.

Indian Hotel Limited also changed their strategy wherein they are going on asset light properties under management contract rather than owning the properties. With the Indian and US economy recovery wherein Indian Hotel Ltd owns or operate their maximum properties under different brand name will be one of the major beneficial and expected to beat the industry growth. Given the higher brand recognition, 

Dividend payout and free hotel coupons which Indian hotel limited offer to its customer investor should consider that they are paying 13% lower in longer term. It is expected that by December 2016 Holiday season, the company equity will be around 40 to 50% higher than the current prevailing price.

Disclaimer - Consult your financial advisor before investing

Tata CLiQ e-commerce platform - Serious Competitor

For the last three year, India is the talking point everywhere around e-commerce boom with more than 70 million user uses e-commerce portal for one or another reason. The potential ofe-commerce is huge provided tackled properly in a strategic manner given the fact that mobility data user are growing. Till now only 23% of total data users are opting for e-Commerce sites; be it mobile or WEB and transaction rate is in low single digit until unless e-commerce portals are going for flash sales.

Interesting maximum revenue of established e-commerce companies revenue comes from electronics section and predominantly from mobile devices. Still e-commerce companies only sells around 15-17% of the total shipped Smartphone through their portal and rest falls in Local Retailer segment. After observing the trend of e-commerce companies performance as well as the threat points; at last Tata group announced their entry into the said segment.

We should remember that they have very strong experience through their retail business around fashion, electronics and other segment and many of the Tata Sons controlled companies offer many products such as capital goods and all. During phase 1 of retail business, they defined the process of procuring to warehousing to channel management to delivery management which is very crucial for any organization to be successful.

 Secondly, Tata sons also controlled one of the finest companies in the IT segment and can change the tide on the basis of innovative mechanism which no one can even think off. Given the above facts, CLiQ may immediately impose itself as non avoidable competitor in the market place using its unmatched brand value, great market reach, producer of many product.

They may opt to connect their retail outlets with CLiQ where user can place an order online whereas delivery or demo can be done through retail outlets.

Given the branding, most of the buyer and seller will be more than happy to get attached with them and on top of that, Tata may not opt to reverse strategy where they choose to acquire only profitable user base instead of user base to generate virtual valuation to get the funding.

In my opinion, the combination of CLiQ and Tata Group controlled retail outlet may pose very stiff competition to its competitor and believe that it will be learning for everyone. Its a move by Tata Sons which carry a capability to change the market dynamics