HOTEL LEELA

Bangalore continued to be the market leader in terms of occupancy and ARR (Average Room Rate) and is considered the best hotel market in Asia at present and one of the best in the world. Average occupancy has shot up WITH now ARR 19000 per day. last year contribution from The Leela Palace Kempinski, Bangalore at Rs.139 crores was more than 50 % of total income. The Leela Palace Kempinski, Bangalore has carved a niche of its own in the business segment and enjoys the highest RevPar in the country. This unit has been ranked by CRISIL as the best performing hotel in the country. Mumbai, the financial capital of India, continued to experience a large surge in demand which was reflected in relatively higher ARR, especially in north Mumbai. The ongoing improvements to infrastructure in terms of wider roads, flyovers and Highway development and renovation of the Mumbai Airport will add to demand since not much of hotel construction is to be seen.

New Projects in view:

(a) Chennai: The Company has acquired land at Chennai for the construction of a Five Star Deluxe Luxury Hotel (about 280 rooms in phase-I) and IT Park and the project work will be commence after receipt of the necessary approvals. This hotel is expected to be ready for operation in the year 2008-09.
(b) Hyderabad: The Company has identified suitable land for setting up a Five Star Deluxe Luxury Hotel. The land identified has an FSI to set up a 300 room hotel. The process of acquisition of the land so identified is under process. This hotel is expected to be ready for operation by end 2007-08.
(c) Kovalam (Kerala): The Company has proposed to acquire an existing and operating Resort Hotel located in the pristine and scenic Kovalam beach. This hotel, located partly on the peak of a cliff and partly on the beach is very unique and offers an exciting experience for the discerning high-end international tourists coming to India for long holidays.

Projects under implementation:

(a) The Leela Business Park, a joint venture project with Rockfort Developers (a combine of HDFC and Rahejas) is almost completed and the same is expected to be fully completed before the end of July, 2005.
(b) The preparatory work for the construction of additional wing at The Leela Palace Bangalore is in progress and the project is expected to be completed and commissioned during first quarter of the financial year 2006-07.
(c) The civil work for The Leela Palace Udaipur is expected to be completed during the year 2005-06 and thereafter the balance work of interiors and services, etc. would be taken up

The hotel industry in India never had it so good, and it is expected that all hotel stocks will continue to outperform in the coming future, on the back of rising ARR's and record occupancy levels.The management seems to have come out with a guidance of 100% to 150% y-o-y growth inFY-07 in comparison to FY-06. Hotel Leela may close FY-06 with a PATof 100crs. (Q3 np was 32.25crs., while that for Q4 may besignificantly higher).If we are talking of a 100-150% rise in profits for FY-07, that wouldmean a np of anywhere between 200crs to 250crs. Even assuming the lower-end, this would translate into an eps of above 25, and considering the high discounting which the industry enjoys, I would put down a conservative target of 700 by the end of FY-07


MY VIEW : one shld invest 25% arnd 325 levels......another 50% arnd 275 n rest at 250 if it ever falls in the worst market condotion