Navratri 2024- Is it a good time to bet on tourism stocks this holiday season? – Market News

The markets have seen a significant correction in the past few sessions. Often the question is does this type of correction make it an appropriate opportunity to enter the market? The next question is of course what type of stocks should one invest in? As a retail investor, long-term growth stories are generally what one wants to bet upon. Apart from the usual line-up of blue-chips and defensives, one could also focus on the travel and tourism sector.

India ranks 39^th across South Asia on the Index of Travel & Tourism Development 2024, which was released by the World Economic Forum. This is a significant improvement from the 54th rank India had in 2021. Overall, travel and tourism is a diverse industry with several sub-segments like hospitality, tourism infrastructure, software solutions to ticketing platforms. All of these sectors stand to gain in some or the other way from the tourism boom that we have been seeing lately.

According to ace investor, Vijay Kedia, “The future of the tourism industry in India looks very bright due to several key factors:

1. Diverse tourist offerings
2. Rising middle-class and disposable incomes
3. Government initiatives
4. Improved connectivity and infrastructure
5. Visa reforms and ease of travel
6. Digital and smart tourism
7. Growth of niche tourism
8. Favourable demographics
9. Cultural heritage and religious tourism
10. Post-pandemic recovery
11. Increased promotion of lesser-known destinations

This theme has just begun and is likely to be last in Amritkaal, for the next 25 years.”

Travel and tourism have got a renewed impetus and are also an important contributor to the country’s GDP. In 2023, the overall sector’s contribution to the GDP exceeded $230 billion. However, the sector is quite expansive and includes ticketing platforms for hotels, restaurants and even luggage manufacturers.

Here are 6 interesting tourism stocks to watch out for

Especially, with the festive season kicking in and people planning their holidays, here is a quick look at potential bets that you may consider adding to your portfolio. These stocks have delivered double-digit returns over the past one year.

1. IRCTC

This is a popular stock connected with tourism and the travel industry. The company offers online ticketing, bottled water at the stations and also food service. IRCTC or  Indian Railway Catering and Tourism Corporation also holds ‘Mini Ratna’ status and is under the Ministry of Railways. The company clocked a 33% rise in Q1 net profit while Q1 revenue increased by 11%. The performance was largely in line with market estimates. The stock has delivered 19% returns over 1 year and has a PE ratio of 62.84. Its market cap is Rs 69,820 crore.

2. IHCL

Hospitality is an integral part of the tourism sector and in this subsegment, Indian Hotels is a stock that you could keep an eye on. The company that runs the Taj Group of hotels has delivered a 1-year return of 57.64% with a PE Ratio of 74.76 and a market capitalisation of Rs 94,124.46 crore. The Q1 profit saw a 12% jump. However, many brokerages have cited the high valuation as a point of concern for the stock.

3. EIH

This is another hospitality stock with smart 1-year returns of 68.23%. The PE Ratio for EIH is at 38.33 with a market cap of Rs 24,498.64 crore. When you are looking for potential options in the tourism sector, this is another option. Operating the Oberoi Hotels, EIH has been on an upward trajectory. The company had posted weak Q1 numbers but the management is confident about the outlook and demand momentum picking up in the subsequent quarters. The stock has corrected significantly from its highs and the management aims to double the current room count along with adding 50 properties by 2030.

4. BLS International Services

If you are betting on travel and tourism, it is hard not to discuss BLS International. The company offers an online visa application centre and provides consultation for visas. The stock’s 1-year return is around 41.03% with a PE Ratio of 46.64 and a market cap of Rs 14,596.22 crore.

5. Thomas Cook India

This is a complete travel planning and solution company. Thomas Cook’s 1-year return is around 60% with a PE ratio of 35.41 and a market cap of Rs 9172.42 crore. The company has clocked strong profit and revenue growth in Q1 and the consensus is that there is further upside in the stock and hope for it to rise over 10% through FY25.

6. ITDC

The ITDC or India Tourism Development Corporation is another interesting small-cap share in the travel and tourism sector. This is a government-owned hospitality and retail company under the Ministry of Tourism. Given the Govt push for tourism, the stock is expected to benefit from the current spike in travel during the holiday season. The stock has delivered over 64% return over 1 year and has a price-to-earnings ratio of 82.68. The government’s recent push towards tourism is seen as supportive of the stock.

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