East India Hotels (EIH) is in focus, as India has started allowing foreign tourist arrival after a gap of one-and-a-half years. EIH, which operates Oberoi, a Trident brand of hotels, will be benefited from this.

As far as the domestic market is concerned, a strong recovery, driven by a steep reduction in the COVID-19 cases, is expected. An improved pace of vaccination will lead to strong travel demand.

The ‘strategic alliance’ with Mandarin Oriental Hotel Group worldwide, which has 33 hotels, is beneficial for EIH. The company is aiming to increase its food and beverage revenues by opening new restaurants, providing business lunches, and home delivery.

Manpower rationalisation and adoption of digital initiatives would reduce the cost structure and improve the overall profitability. EIH has a strong loyal customer base of 7,50,000 customers, which will lead to a stronger recovery.

The company has a strong balance sheet with a debt-to-equity of 0.15 times.

As far as the valuation is concerned, the stock is trading at 27 times FY23 EV by EBITDA projections and is close to pre-COVID levels.

Moneycontrol Pro has a positive view on this stock.

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