Travel, Tourism Q3 Results Preview- Demand Tepid For Luggage But Hotels To Blossom: Prabhudas Lilladher

Prabhudas Lilladher Report

Luggage: Our checks revealed soft demand environment in the traditional dealer-distribution channel, however, uptick in online format has been good. Backed by festivities and seasonality (travel and wedding) we expect VIP Industries Ltd./Safari Industries India Ltd. to report 5%/25% growth in top-line. Further, competitive pricing is likely to offset benefit of benign raw material prices and result in gross margin of 52%/45% for VIP/Safari.

Hotels: In a seasonally strong quarter, we expect Chalet Hotels Ltd./Lemon Tree Hotels Ltd. to report average room rate of Rs 11,185/Rs 6,406 respectively. While Chalet would stand to benefit from operationalisation of 88 rooms at Novotel, Pune; Lemon Tree’s performance would get a boost from inauguration of 669 rooms at Aurika, Mumbai.

Overall, we expect Chalet and Lemon Tree to report top-line growth of 22.6%/19.6% with Ebitda margin of 43.4%/47.9% respectively.

Aviation: We expect Interglobe Aviation Ltd. to report load factor of 85.1% and yield of Rs 5.3 (in-line with Q3 FY23) buoyed by festivities and World Cup. We expect gross spread of Rs 3.19 (revenue per available seat-kilometer less fuel cost of available seat kilometer) aided by 5.9% YoY fall in aviation turbine fuel prices (up 10.8% QoQ to Rs 113 per litre in Q3 FY24). Overall, we expect Indigo to report revenues of Rs 181 billion (up 21.3% YoY) with Ebitdar margin of 24.8% (adjusted for forex impact).

Top picks: Lemon Tree remains our preferred pick in the travel and tourism space given its crown jewel asset Aurika, Mumbai has just started operations.

In luggage space, we prefer Safari Industries given recent correction provides a good entry point.

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