Benares Hotels Shares Surge To New Highs Amid Strong Domestic Demand

Shares of Benares Hotels soared to a new high of Rs 10,990 on Tuesday, rallying 15% on the Bombay Stock Exchange (BSE) in intra-day trade. This surge comes amid expectations of record revenue in the March quarter (Q4FY25), driven by robust domestic demand fueled by the Kumbh Mela and related travel activity in the Uttar Pradesh region. The stock has climbed 34% in January, significantly outpacing the 2.2% decline in the BSE Sensex. Meanwhile, the BSE Midcap and Smallcap indices have fallen 10% and 17%, respectively.

Benares Hotels, which operates notable properties like Taj Ganges and Taj Nadesar Palace in Varanasi and Ginger in Gondia, Maharashtra, is part of the Indian Hotels Company Limited (IHCL) group. For the October to December quarter (Q3FY25), the company reported a 20% year-on-year growth in profit after tax (PAT), reaching Rs 13.60 crore. Revenue also grew by 16.2%, totaling Rs 40.1 crore compared to the same period last year.

The company has seen impressive growth over the past three quarters, posting high double-digit revenue increases. This growth has driven an all-time high earnings before interest, tax, depreciation, and amortization (EBITDA) margin of 46%, and a PAT of Rs 27.2 crore for the nine-month period ending December 2024.

Strong Domestic Demand Drives Future Outlook

Benares Hotels’ management remains optimistic about the future, citing continued strong domestic demand. The company expects Q4FY25 to deliver record revenue, bolstered by the influx of visitors for the Kumbh Mela and related travel in Uttar Pradesh. This trend aligns with broader growth expectations in the Indian hospitality industry.

According to a recent report by credit ratings firm ICRA, India’s hotel industry is expected to see revenue growth of 7-9% in the next financial year (2024-25). Hotel occupancy across the country has reached a decadal high of 70-72% in the current fiscal year, with a similar outlook for the next.

Indian Hospitality Industry Poised For Growth

The Indian hospitality sector, valued at $24.61 billion in 2024, is projected to grow to $31.01 billion by 2029, reflecting a compound annual growth rate (CAGR) of 4.73%. The industry is supported by several factors, including improved infrastructure, better air connectivity, favorable demographics, and the opening of new convention centers. Domestic demand is expected to remain strong through FY 2024-25, even as international travel shows signs of recovery, adding further growth potential.

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The sector’s continued expansion is also anticipated to be driven by government policies and infrastructure development, as well as the resumption of diplomatic movements after elections, which are expected to boost hotel demand in cities hosting these events.

Expansion Plans To Meet Rising Demand

In response to the growing demand and high occupancy rates, Benares Hotels has initiated the construction of a 100-room tower at its Taj Ganges property in Varanasi. The expansion will increase the total room inventory to 230, with the new rooms featuring larger sizes to meet the needs of a growing customer base.

With strong financial performance, a bullish outlook for the hospitality sector, and ongoing expansion efforts, Benares Hotels is well-positioned to capitalize on both domestic demand and emerging growth opportunities in India’s thriving hotel industry.