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Impact of "New Business Model" by IHCL on Investors

Investors in IHCL seem to be betting on its asset-light strategy.

Step taken by IHCL for Hotel Industry brought lot of changes in Market a major shift from Traditional Strategy to Asset Light Strategy focus on Equity Investment on those where an organization's expertise achieves the best return for investors.

Benefit of this Strategy are:

  • Positive impact on investors

  • IHCL and EIH Ltd have outperformed the Nifty Midcap Index on a one-year horizon

  • Higher Returns on Investment (ROI)

  • Ebitda (Earnings Before Interest, Tax, Depreciation and Amortization) rose by 16% after the implementation of Indian Accounting Standards -116 norms

  • Higher operating performance implied costs are being in control.

  • “Traction in new signings continued with addition of 1,257 rooms in Q1FY20 (April-June) across seven cities, which took the pipeline to 4,500-plus rooms (FY19: 4,000 rooms)."  According to Edelweiss Securities Ltd.

  • Seven new contracts in Q1 added

  • Occupancy rates in the industry moved up by 3% points to 69% year-on-year in FY2019, according to data from ICRA Ltd.

  • UK & US business remain in cloud .

  • Earnings Per Share (ERP) Increase by 35% average compounded rate due to Margin Expansion and Lower Capex Intensity.

source : ET