Sectoral Analysis – Hotels- Large

In 2004-05, India’s hotel sector recorded one of the highest P/E multiples
in the bull run beating ratios of other hot sectors like IT, banking, cement
and auto. As on September 30, 2005, the consolidated trailing P/E for the
124 listed hotel industry scrips stood at 35.36. The corresponding P/Es for
IT industry stood at 31.31, cement, 34.82 and auto 21.12. Retail sector at
40 plus P/E and pharma at 36 plus P/E are the few sectors recording
higher P/E ratios.

Sales at Indian Hotels rose by 27 % to Rs 202.26 crore in the quarter

ending on June 05 on higher Average Room Revenues (ARR) and
occupancy figures. The OPM for Indian Hotels rose to 20.3 % from 12.8 %
while operating profits (OP) rose to 41.02 crore. Others like East India
Hotels (EIH) (Oberoi hotels) also saw an OPM increase from 6.1% to
18.4%. The OP also rose by 300 % to Rs 25.82%.

Icra’s hospitality industry analyst Yogesh Malhotra said that the operating
margins raised because most of the costs at hotels were fixed while the
variables costs were less. With more tourists using the same facilities, the
same resources generated more revenues as the yields maximised. Most
major players drew expansion plans for adding capacity anticipating a
further increase in demand.

The hotel industry employment figures also increased between 24 to 27 %

in 2004. Since the peak season for the industry starts from October, the
industry hopes to capitalise on the increasing tourist.

Year 2004 was a good year for Indian hospitality since the occupancies
shot up by at least 10% at hotels across the country. The Incredible
India campaign had positive effect with foreign travellers visiting the
country in vast numbers. The political stability of the United Progressive
Alliance (UPA) government enhanced confidence in the economic growth
of India, making business travel rise exponentially.
The companies considered for analysis are:

1. Asian Hotels
2. EIH Ltd
3. Indian Hotels
4. Leela Ventures Ltd

Asian Hotels Ltd:

Asian Hotels Ltd is one of the leading player in the Indian hospitality
industry operating a chain of deluxe category hotels under the brand
Hyatt Regency Hotels. The company presently operates three five-star
deluxe in three metros Delhi, Kolkata and Mumbai with the name Hyatt
Regency Delhi, Hyatt Regency Mumbai and Hyatt Regency Kolkata.

Price earnings:

2000 2001 2002 2003 2004 2005 2006 2007 200 2009
8

Asian 6.39 9.02 12.3 17.5 94.2 33.1 26.2 18.6 9.76 10.8
Hotels 7 6 3 1 4 4 9

Indust 12.4 16.3 20.6 32.1 38.2 62.5 58.1 16.5 11.4 13.7
ry avg 3 4 3 4 7 4 8 7

From the table we can see that in 2004, the Price earnings tremendously
shot up to 94.23 as compared to the average of 38.2. Asian Hotels ltd also
showed returns of 82.02 % over the BSE stock index. Increasing sales
along with higher operating margins and operating profits are some of the
reasons behind this growth.

Price to Book Value:

 2000 2001 2002 2003 2004 2005 2006 2007 200 2009
8

Asian 0.88 0.8 0.62 0.61 1.58 2.81 4.56 4.4 1.9 0.98
Hotels 4

Indust 0.95 0.86 0.88 0.77 1.74 2.55 4.57 4.03 3.1 1.45
ry avg 5 1

In 2006 the Price to Book value rose by 60%. This shows that the Price is
moving much faster than the Book Value. A lower Price to Book ratio
means that the stock is undervalued. However, it could also mean that
something is fundamentally wrong with the company. This ratio varies by
industry. It also gives some idea of whether you're paying too much for
what would be left if the company went bankrupt immediately.

Price/ Cash EPS:

2000 200 2002 2003 200 2005 200 2007 2008 200
1 4 6 9

Asian 5.56 7.3 8.67 10.55 16. 17.6 18. 14.9 8.22 7.6
Hotel 4 53 8 84 7
s

Indus 6.22 7.3 10.33 11.08 17. 19.1 23. 16.3 13.2 8.9
try 25 55 25 75 17 95 28 25 05 95
avg

The Price to Cash EPS has shown a steady growth over years and has
declined from 2006 onwards. The Cash EPS is a measure of financial
performance that looks at the cash flow generated by a company on a per
share basis. The higher a company's cash EPS, the better it is considered
to have performed over the period. Therefore we can see that Asian
Hotels Ltd performed well both in terms of Share Price and Cash flows
maintaining a steady growth till 2006. The effect of recession is shown in
the following years.

EV/EBIDTA:
 200 200 200 2003 200 200 2006 200 2008 200
0 1 2 4 5 7 9

Asian 4.67 9.0 17.8 20.83 11.7 11.7 12.6 10.0 5.66 5.46
Hotels 9 7 7 2 9

Indust 7.67 9.7 16.6 14.31 14.3 13.7 16.2 11.4 10.3 8.87
ry avg 5 1 75 7 15 6 35 5

This ratio shows the proportion of enterprise value to its earnings before
interest, depreciation, taxes and amortization. It takes into account the
whole enterprise value which is not affected by the leverage. Here the
ratio has increased till 2003 and decreased then onwards.

Market capitalization/Sales:

2000 200 2002 200 200 200 200 2007 200 2009
1 3 4 5 6 8

Asian 1.97 1.82 1.73 1.54 2.06 3.02 4.26 3.97 2.5 1.68
Hotels

Indust 1.54 1.73 1.78 1.43 2.41 3.34 5.92 4.67 3.5 2.18
ry avg 75 25 5 5 25 3 75

As mentioned earlier, the Hotel industry was in a boom during 2006 due
to the Incredible India campaign. This increased the Sales of almost all the
hotels. This resulted in the increase of Market Capitalization to Sales by
41%

EIH:

EIH Ltd, the flagship company of Oberoi group is one of the largest chain
of hotels in India. The company is in the business of luxury hotels,
restaurant, management contracts and travel and tours. Their services
include airline catering, management of restaurants and airport bars,
travel and tour services, car rentals, project management and corporate
air charters. They operate hotels under the brand name Oberoi and
Trident.

Price earnings:

2000 2001 2002 2003 2004 2005 2006 2007 200 2009
8

EIH 11.5 13.6 43.9 186. 82.7 62.8 20.6 19.3 26.2 20.8
8 9 9 87 7 4 5 8

Indust 12.4 16.3 20.6 32.1 38.2 62.5 58.1 16.5 11.4 13.7
ry avg 3 4 3 4 7 4 8 7

Between January 2003 and December 2006, the EIH stock rose by 312%.
The growth slowed down a bit later because of a much higher base. In
2006, EIH reported a revenue growth of 23.4%, lower than its average in
the previous two years.

Price to Book Value:

2000 2001 2002 2003 2004 2005 2006 2007 200 2009
8

EIH 1.02 1.4 1.65 1.22 2.16 2.47 4.69 3.97 5.0 2.88
6

Indust 0.95 0.86 0.88 0.77 1.74 2.55 4.57 4.03 3.1 1.45
ry avg 5 1

Here the price to book value ratio exhibits an increasing trend except in
the year 2003. In the year 2006 it shot up due to the boom experienced
by this industry during the period and drastically rose in the year 2008
again because of the good performance of the company irrespective of
the industry performance.

Price/ Cash EPS:

 2000 200 2002 2003 200 2005 200 2007 2008 200
1 4 6 9

EIH 8.34 10. 20.64 20.85 25. 24.7 16. 15.8 21.4 15.
18 44 6 81 1 9 67

Indus 6.22 7.3 10.33 11.08 17. 19.1 23. 16.3 13.2 8.9
try 25 55 25 75 17 95 28 25 05 95
avg

The ratio has been increasing till the year 2004 followed by a decreasing
trend till 2007. This is since the EIH stock rose by 312% between 2004
and 2007 and was simultaneously accompanied by an increase in the
cash EPS during this period. As a result the overall ratio has been
declining. It shot up in the year 2008 which resulted in an increase of
35.93% and hence it has not been affected by the industry average.

EV/EBIDTA:

200 200 200 2003 200 200 2006 200 2008 200
0 1 2 4 5 7 9

EIH 7.71 9.0 16.1 16.92 18.4 13.9 11.2 10.1 13.1 10.6
3 4 9 6 9 5 3 8

Indust 7.67 9.7 16.6 14.31 14.3 13.7 16.2 11.4 10.3 8.87
ry avg 5 1 75 7 15 6 35 5

The ratio has been increasing till the year 2004 followed by a decreasing
trend till 2007. It shot up in the year 2008 which resulted in an increase of
30% and hence it has not been affected by the industry average.

Market capitalization/Sales:

2000 200 2002 200 200 200 200 2007 200 2009
1 3 4 5 6 8

EIH 1.78 2.31 3 2.13 3.21 2.81 4.94 3.93 4.9 3.82
7

Indust 1.54 1.73 1.78 1.43 2.41 3.34 5.92 4.67 3.5 2.18
ry avg 75 25 5 5 25 3 75

The market capitalisation/sales ratio has shown a drastic increase in the

year 2006 where it rose up to 4.94 resulting in an increase of 75.8%. The
rise can again be attributed to the boom in the hotel industry.

Indian Hotels Ltd

Indian Hotels Co. Ltd. (IHCL) is the oldest listed hotel company in India
and operates properties under the brand ‘Taj Hotels Resorts & Palaces’.
The company is aggressively expanding capacities, especially through the
management contract route and is looking to establish a significant
presence in key international destinations. Jamsetji N Tata initiated an
element of Tata group; The Indian Hotels Company Limited was
incorporated in the year of 1902. The company and its subordinates are
communally known as Taj Hotels Resorts and Palaces, is one of Asia's
prime and most excellent hotel company in hospitality sector. The Taj
Mahal Palace Hotel, Bombay was started in the year 1903, which was the
company's first property.

In 2001-02, the company hived off its air catering business to a new joint
venture company namely Taj SATS Air Catering by relationship with
Singapore Airport Terminal Services (SATS). The company has originated
Taj Wellingtone Mews Luxury Residences located in Mumbai with 80
serviced apartments in the year 2004, in same year the company has
launched 'Smart Basics' concept, indiOne, at Bangalore through Roots
Corporation Ltd, its wholly owned subsidiary and also launched its
exclusively developed two brands viz the high end 'Jiva Grande Spa' and
the smaller `Jiva Spa' traditional Indian ayurvedic & yogic systems, set in
internationally contemporary ambience. During the year 2005-06 IHCL
entered into its third marketing alliance. The first such alliance was
occurred with Raffles Hotels and Resorts encompassing 14 Taj Luxury
Hotels and 15 Raffle Hotels. The second alliances were made with Shilla
Hotels and Resorts, Korea and the third marketing alliance was made with
Silversea Cruises, European Cruise Company in the year 2006-07, also the
company tied up with Qantas Airline for frequent flier loyalty program.
The Taj brand campaign was launched in the US market in January 2007,
the campaign has two distinct elements namely the `Perspectives' and
the `Portraits'.

IHCL plans to integrate environment management in all its business areas

as a part of EARTH (Environment Awareness and Renewal at Taj Hotels).
EARTH is a company-wide movement to reinstate its vision and efforts on
environment management in all its hotels.

P/E Ratio

200 200 200 20 200 200 20 200 200 200

9 8 7 06 5 4 03 2 1 0

Indian 13 18.8 27.8 44. 29.5 33. 22. 9.79 10. 10.
Hotels 3 5 49 8 73 56 25 06
Ltd
Industry 12. 16.2 20.6 32. 38.2 62. 58. 16.5 11. 13.
Average 425 975 375 13 025 535 17 375 475 765

P/E ratio as the name depicts measures the price paid for a share relative
to the annual net income or profit earned by the firm per share. If P/E ratio
is higher than it means for earning every single unit of income, investor is
paying more amount. If we look at the Indian Hotels Ltd., we find out that
there is increase in the P/E ratio from year 2002 to year 2004 and this is
approximately increase of 244%. The main reason of rising of ratio in a
particular period is one like at that time whole industry is at the boom
phase, e.g. there is an increase in industry is around 354%. So,
correspondingly Indian hotels ratio is also increased. Another reason can
be in those particular years IHCL had came with many new ventures
which ultimately affects the stock prices as through expansion plans they
tried to improve their reputation and earnings both. Whereas in later
years from 2006 onwards there is decline in P/E ratio around 53% , the
one of the reason was company acquire new venture in year 2008 and
this will affect the earnings of company and company also raise debt in
year 08 for the same purpose. Therefore, that’s why there is fall in P/E
ratio whereas industry in this period is also come down around 76%.
.

P/BV Ratio

20 200 20 20 20 200 20 200 200 200

09 8 07 06 05 4 03 2 1 0

Indian 0.9 3.34 4.7 4.4 2.5 2.12 0.9 0.89 1.12 1.14
Hotels Ltd 4 5 9 9 3

Industry 1.4 3.11 4.0 4.5 2.5 1.73 0.7 0.87 0.95 0.86
Average 5 25 35 65 45 75 7 75 25 25

P/BV is a valuation ratio and is arrived at by dividing the market price of a

share with the respective company's book value per share. If we subtract
current liabilities and debt from total assets then we get book value. P/BV
figures for companies in the services industries like software and FMCG
are high as compared to those of companies in the sectors like auto,
engineering, steel and banking. This is because companies from the
sectors like software and FMCG have low amount of tangible assets (fixed
assets etc.) on their books and, as such, the P/BV may not be a correct
indicator of valuation. If we look at the graph of Indian Hotels and Industry
average we find that the price to book value ratio is almost same every
year as the industry moves similarly company trend line also moves.

Price/Cash EPS

20 20 200 200 20 200 2003 20 20 200

09 08 7 6 05 4 02 01 0
Indian 9.0 15. 21. 32. 18. 18.0 10.89 6.1 7.3 7.47
Hotels 8 21 46 21 78 7 6
Ltd

Industry 8.9 13. 16. 23. 19. 17.1 11.08 10. 7.3 6.22
Average 95 205 325 28 195 7 75 332 55 25
5

A measure of financial performance that looks at the cash flow generated

by a company on a per share basis. This differs from basic earnings per
share (EPS), which looks at the net income of the company on a per share
basis. The higher a company’s cash EPS, the better it is considered to
have performed over the period. But here we are calculating price to cash
EPS it means we are here see how much proportion of earnings we are
getting in cash. So, we can see that there is also increase in ratio as
compared to industry average upto 2006 but again from year 2006
onwards it starts declining as one of the main reasons is paying higher
interest on debt which was raised for the amalgamations.

EV/EBIDTA

200 200 20 200 200 200 200 20 20 20

9 8 07 6 5 4 3 02 01 00

Indian 7.99 11.9 14. 21.4 15.8 15.6 10.4 7.3 7.0 7.3
Hotels 7 2 7 7 4 4 7 1 7
Ltd

Industry 8.87 10.3 11. 16.2 13.6 14.3 14.3 16. 9.7 7.6
Average 5 55 46 15 925 7 175 6 1 75

Economic Value or enterprise value is one and the same thing. Here we
find out that what the enterprise value in proportion to earnings is before
depreciation, interest and taxes. This ratio is generally used for cash
based businesses. And this ratio is capital structure neutral means this
ratio doesn’t affected by capital structure whether debt increased or
decreased it doesn’t matter as earnings are taken before interest. Here
also ratio is increased to year 2006 and 2006 onwards it starts showing
decline trend. From 2006 to 2009 there is decline of around 63% in
company and in industry it is around 46%.

Market Cap/Sales

200 200 200 20 200 20 200 20 20 200

9 8 7 06 5 04 3 02 01 0

Indian 1.76 3.8 5.54 6.8 3.4 2.8 1.44 1.3 1.6 1.82
Hotels 2 9 5 3 6 7
Ltd

Industry 2.18 3.5 4.67 5.9 3.3 2.4 1.43 1.7 1.7 1.54
Average 75 3 25 25 4 1 5 825 3 75

It is calculated by dividing the company's market cap by the company's

revenue in the most recent fiscal year (or the most recent four fiscal
quarters); or, equivalently, divide the per-share stock price by the per-
share revenue. The metric can be used to determine the value of a stock
relative to its past performance. It may also be used to determine relative
valuation of a sector or the market as a whole. Here graph also depicts
that almost ratio of company is going correspondingly to industry
average. Somewhere in year 2003- 2005 company is above than industry
average whereas in year 2009 industry average becomes more than
company average. One of the reasons of declining trend in hotel industry
is the lower number of arrivals of tourists in India.

Conclusion

IHCL has ambitious expansion plans to further consolidate its leadership

position in India and establish itself in international markets. For achieving
this in a cost efficient manner in a shorter time-span, we expect that it
would adopt an ‘Asset-Light’ model. This coupled with IHCL’s brand
positioning, management’ capability and execution skills, hold potential
for improved asset sweating and capital efficiency despite the equity
dilutions and extended gestation cycle. Along with its associates and
subsidiaries, IHCL has targeted the commissioning of 8.8k rooms by the
end of FY11, through various options. This would take the total number of
rooms under its management to ~19k from the current 10.1k rooms.

Leela Venture Ltd

Hotel Leela Venture Ltd is one of the leading players in the Indian
hospitality industry. The company operates in both, the leisure and
business sectors. The Leela palaces and resorts include a chain of five star
luxury hotels and resorts. The company properties include The Leela
Kempinski in Mumbai, The Leela Palace in Goa, The Leela Palace
Kempinski in Bangalore and The Leela Kovalam in Kerala. The company
became a popular name in the hospitality industry in India due to their
high quality of service to their customers.

Founded in 1957 by Capt. C.P. Krishnan Nair, the Rs.450 crore Leela
Group is engaged in the business of ready-made garments and luxury
hotels and resorts.

P/E Ratio

200 200 200 20 200 200 20 200 200 200

9 8 7 06 5 4 03 2 1 0

Leela 4.9 10.3 16.7 37. 27.2 39. 5.6 0 12. 27.
Venture 3 5 2 19 5 48 9 94 03
Ltd

Industry 12. 16.2 20.6 32. 38.2 62. 58. 16.5 11. 13.
Average 425 975 375 13 025 535 17 375 475 765

By looking at the statistics we found that P/E ratio in year 2002 of leela
venture ltd. Is almost 0 whereas in the same year industry grow with a %
of 44. The main reason at that time was during the year 2002-03, Leela
Hotels Ltd, a wholly owned subsidiary company merged with the
company. In year 2002 adjusted profit which was brought forward in the
same year is in negative terms i.e. approx. 3 crore, which makes the
balance of current year profit very minimal and due to low earnings,
company did not provide any dividends which ultimately resulted into
higher retention ratio. Now, from year 2002 onwards by analyzing
company’s profit and loss account we found that profit has been
increasing with the increasing trend but the market price of scrip has not
increasing with the same proportion as a result of which P/E ratio comes
down to 4.93%. In year 2006, the highest market price had been reported
till now. Excluding year 2000, 2001 and 2006, industry average is always
higher than the leela venture P/E’s Ratio.

P/BV Ratio

200 200 20 20 20 20 200 200 200 200

9 8 07 06 05 04 3 2 1 0

Leela 1 2.11 3.0 4.5 2.3 1.0 0.3 0.35 0.49 0.41
Venture 2 2 1 9 2
Ltd

Industry 1.4 3.11 4.0 4.5 2.5 1.7 0.7 0.87 0.95 0.86
Average 5 25 35 65 45 375 7 75 25 25

This ratio compares the market's valuation of a company to the value of

that company as indicated on its financial statements. The higher the
ratio, the higher the premium the market is willing to pay for the company
above its hard assets. A lower P/B ratio could mean that the stock is
undervalued. However, it could also mean that something is
fundamentally wrong with the company. Price to Book value ratio of
company has been increased from year 2000 to 2001 but from 2001 it
starts declining with a 35% upto 2003 but from 2003 it again starts
increasing till 2006 and then again falls from 2006 to 2009. The main
reason of declining in the price to book value ratio in company as well as
industry is financial crisis and fear of terror. Company has huge debt on
its books (both convertible and unconvertible), which will either weigh
directly on its income statement in form of huge interest cost going
forward, or massively diluted earnings per share (or both), which should
make existing investors uncomfortable being invested in the company

Price/Cash EPS

200 200 200 20 20 200 20 20 200 200

9 8 7 06 05 4 03 02 1 0

Leela 3.56 7.9 13.1 25. 15. 8.64 2.0 5.8 4.6 3.52
Venture 3 26 56 6 6
Ltd

Industry 8.99 13.2 16.3 23. 19. 17.1 11. 10. 7.35 6.22
Average 5 05 25 28 195 7 087 332 5 25
5 5

The higher a company’s cash EPS, the better it is considered to have

performed over the period. But here we are calculating price to cash EPS
it means we are here see how much proportion of earnings we are getting
in cash. In year 2000-01, company was raised funds which make inflow of
cash and market price of scrip was also increased which ultimately
compensate the total increase in price to cash EPS ratio. In year 2008
company had raised the huge funds approx.1100 Crores which make huge
inflow of cash into company but the market price of scrip did not increase
in the same proportion instead of increasing it falls down so as a whole
price to cash EPS ratio down in 2008 and 2009. .

EV/EBIDTA

200 200 200 20 200 20 200 20 20 200

9 8 7 06 5 04 3 02 01 0

Leela 11.3 10.6 11.4 19. 13.2 11. 9.08 25. 13. 10.9
Venture 7 6 5 2 58 02 71 5
Ltd

Industry 8.87 10.3 11.4 16. 13.6 14. 14.3 16. 9.7 7.67
Average 5 55 6 21 925 37 175 6 1 5
 5

A ratio used to determine the value of a company. A low ratio indicates

that a company might be undervalued. EV/EBIDTA ratio is useful for
transnational comparisons and to find attractive takeover candidates. In
initial years, company’s ratio is higher than the industry average it means
company is giving more returns to the investors or company has valued
high from investor’s perspective. But later on it starts declining it means
company is undervalued except in year 2006 because at that time whole
industry was at boon and leela also gain high profits which makes it
valuable in eyes of investors. If we look at the years 2008 as well as 2009
we found that company is again starting gaining its strength and making
its position strong in the market.

Market Cap/Sales

200 200 200 20 200 200 20 20 20 200

9 8 7 06 5 4 03 02 01 0

Leela 1.49 2.83 5.25 7.6 4.0 1.54 0.6 1.0 1.1 0.62
Venture 1 8 3 4 2
Ltd

Industry 2.18 3.53 4.67 5.9 3.3 2.41 1.4 1.7 1.7 1.54
Average 75 25 25 4 35 825 3 75

It is calculated by dividing the company's market cap by the company's

revenue in the most recent fiscal year or, equivalently, divides the per-
share stock price by the per-share revenue. The metric can be used to
determine the value of a stock relative to its past performance. It may
also be used to determine relative valuation of a sector or the market as a
whole. While looking at the table, we found that market cap to sales ratio
is higher in year 2006 even greater than the industry average, as in later
years it start decreasing because of decline in tourism rate due to terror
attacks and health consciousness.

Conclusion

Hotel Leela venture Ltd. Has massive plans to strengthen its capacity and
presence in key cities. However, weakening economic scenario and health
scare will have a huge negative impact on the hospitality and aviation
sector that will impact the margins and affect the average room rates and
occupancies. Company has huge debt on its books (both convertible and
unconvertible), which will either weigh directly on its income statement in
form of huge interest cost going forward, or massively diluted earnings
per share (or both), which should make existing investors uncomfortable
being invested in the company. The stock is presently trading at a P/E of 8
times, going forward which is expected to increase to 10 and 14 times in
FY10 & FY 11 respectively. The Earning per share is expected to decrease
from 3.87 in the current year to 2.05 in FY 10.

We initiate a sell call on hotel Leela with a downside potential of 10% from
its current levels. Investment advice is based on Globally weak travel
industry; threat of swine flu, high debt and huge FCCB’S which according
to us will not be converted at the price stated by the company.

Beta Analysis:

200 200 200 200 200 200 200 200 200

Compa 0- 1- 2- 3- 4- 5- 6- 7- 8-
ny 200 200 200 200 200 200 200 200 200 av
Name 1 2 3 4 5 6 7 8 9 g
Asian 0.
Hotels 0.34 0.52 0.44 0.66 0.94 0.45 0.59 0.48 0.44 54
Ltd 77 02 66 78 95 8 84 77 18 29
0.
0.31 0.21 0.32 0.37 0.66 0.52 0.60 0.83 0.40 49
EIH 47 33 84 2 12 21 71 47 19 89
Indian 0.
Hotels 0.60 0.56 0.49 0.72 0.62 0.68 1.30 0.84 0.46 69
Ltd 86 55 18 59 79 54 1 8 89 79
Leela 0.
Venture 0.83 0.65 0.78 1.01 1.10 0.62 0.59 1.04 0.57 77
Ltd 28 28 23 73 84 63 85 93 05 15
Industr
y
Averag 0.52 0.48 0.51 0.69 0.83 0.57 0.77 0.80 0.47
e 59 79 22 57 67 29 62 49 07

The value of BETA measures the systematic risk or volatility of a security

in comparison to the market as a whole. Beta shows the tendency of the
security’s return to responds to swings in the market. The market has a
beta of 1.0, and individual stocks are ranked according to how much they
deviate from the market. A stock that swings more than the market over
time has a beta above 1.0. If a stock moves less than the market, the
stock's beta is less than 1.0. High-beta stocks are supposed to be riskier
but provide a potential for higher returns; low-beta stocks pose less risk
but also lower returns. A beta of 1 indicates that the security's price will
move with the market. A beta of less than 1 means that the security will
be less volatile than the market. A beta of greater than 1 indicates that
the security's price will be more volatile than the market.

The overall beta value of the Hotel Industry in less than 1 (nearly 0.6278).
This value signifies that all the shares in this industry are less volatile in
comparison with that of the market. In year 2004-2005, all the shares of
this industry are depicting a significant increase in comparison with
previous year. Because during this year hospitality industry celebrated the
record tourist arrivals. Asian hotel Ltd has an average of 0.5429 which
shows that this security is less volatile than market. Leela Venture Ltd is
an outlier in this industry having the beta value of 0.7715; from 2004-
2006 and in 2007-2008 the beta value was more than 1 which shows that
this stock was more volatile during that period in comparison with that of
market. Whereas EIH and Indian Hotels LTD are the shares which are
consistently maintaining their beta value of 0.4989 and 0.6979; only in
2006-2007 the beta value of Indian hotels ltd was more than 1; this shows
that over the period of time these shares are less volatile in comparison
with the market.