East India Hotels an excellent pick at current levels

Rajesh Jain, Market Strategist, in a chat with ET Now talks about East India Hotels.

ET Now: Let’s get going on your first pick and the rationale behind why you chose the stock?

Rajesh Jain: East India Hotels becomes an excellent play at this time. The stock has cooled off a bit after Reliance getting a close to 15% stake in the company with the news of the rights offer and speculation in the media that ITC may not subscribe to it. It becomes even more exciting that the possibility of Reliance having a controlling stake or even managing the company, which was a very distinctly remote possibility could now be closer to reality.

Even if you forget this non-fundamental driver in the stock, the company is expected to take a rate hike of 7-10% come October. East India Hotels is also aggressively looking at properties, particularly in China, three cities, Shanghai, Beijing, then in the US, in the UK and certain other cities in Europe. We are all familiar with this super-luxurious properties that Oberoi has created in India and abroad and the addition of a few more properties would make business prospects even brighter. A combination of improving realisations, occupancies and some value unlocking due to the Reliance, ITC and Oberoi triangle makes this an excellent pick at current levels and investors can hope to make 50% on a 12-18 month horizon.