International Travel House: Accumulate at current levels & add on dips for descent returns of 40%-50%

Sanjay Chhabria | Jan. 26, 2010, midnight



International Travel House (ITHL), a constituent of ITC group (61.7% stake) is one of India’s leading travel management companies. The Travel House network consists of 10 IATA Travel Offices, 14 Car Rental Offices and 19 Travel Counters. ITHL is India's premiere travel and tourism company offering full bouquet of travel solutions and services like air tickets, business travel, car rentals, conferences, exhibitions, forex, event management, inbound and outbound leisure trips. ITH commenced operations in 1981 and its expertise has been built up over 30 years and is now one of India’s largest travel management company with presence in 13 cities. ITH is one of India’s largest branded Car Rental companies with 13 Car Rental Offices in the major Indian cities. Clients include NDTV, Infosys, HCL, Siemens, Citibank, ABN, Samsung, Max Hospitals, FICCI, Essel group and 3M, apart from the ITC group. It owns a transport fleet of 900 cars and has over 700 trained travel professionals.

With a team of dedicated professionals, a nationwide network, and state-of-the-art technology, ITHL is well equipped to address all possible travel needs of both business and leisure travellers. It offers a range of services including corporate travel, car rental, destination management services, world class holidays, incentive group travel, conference management and foreign exchange. With India identified as a strong center for medical services globally, ITHL is pursuing the niche segment of medical tourism. The company is also aspiring to be a leader in the conference and exhibition segment of the business. It has been appointed as the official travel partner and professional conference organiser in India by several important international conference organisers. Today, ITHL is servicing business travel needs of many Indian and Multi-National business houses with implants in 160 companies

The company is also pursuing its aspiration to be a leader in the Conference and Exhibition segment of the business by promoting various events. In the MICE (The Meetings, Incentives, Conventions and Exhibitions) segment the encouraging performance is continuing. The segment of outbound corporate incentives is doing well especially on the back of good growth in most of India’s consumer segments. ITHL has been appointed as the Official Travel Partner and Professional Conference Organiser in India by several important international conference organisers. These linkages are expected to generate continuing business during the coming years and have already started producing encouraging results. The inbound business strategy of the company has been further catalyzed by consolidating its presence at various key international trade fairs in source markets viz. World Travel Mart, London, UK, International Tourism Borse (ITB), Berlin, Germany to name a few

Reaffirming its commitment to the Business Traveler and keeping in line with the best global practices, the company has further strengthened its technology platform in terms of air ticketing via the satellite ticket printing and introduction of electronic process for strengthening its credit card payment mechanism, among other technological advancements. The company has also integrated its Travel Accounting software with the Car Rental Accounting package. The company’s project for creating a sophisticated IT based integrated platform is progressing well and a few modules are up and running while others are at an advanced stage of development. This platform, once fully implemented, shall radically transform the manner in which the company conducts its business.

The corporate travel (inbound as well as outbound) holds good growth potential due to increasing linkages with the world. Meeting, Incentive, Conference and Exhibition (MICE) tourism continues to do well on the back of more events and incentive tours from the consumer durable and auto companies. Outbound traffic from India continues to show a healthy growth with some 15.5 million Indians travelling abroad during the past year. According to the World Tourism Organisation, India’s annual outbound traffic should touch 50 million persons by 2020 and account for an annual spend of approximately US$ 28 billion by then. Naturally, a fair share of this would be on account of corporate travel and incentive tours, where ITHL is well represented.

For the Q4 ended March 2017, ITHL registered 6.7% rise in sales to Rs 52.17 cr.. PAT went up 161% to Rs 3.53 cr..  For FY 2017, sales stood at Rs 201.54 cr. and net profit at Rs 11.17 cr.. On a equity of Rs 8 cr.(Promoters’ stake – 61.69%), FY17 EPS stands at Rs 14 and the dividend declared is 42.5%. The company has managed to hold on to its revenues and profits in the last three years in spite of adverse economic environment. However, pick up in corporate and incentive travel consequent to pick up in economy should augur well for the company’s growth in future. At current levels, the ITHL stock appears attractive as it trades at about 13.4 times FY18E earnings (Rs 16.5- Rs 17.5) and at 11.7 times FY19E earnings (Rs 19- Rs 20).  This is low for an ITC group company in a recovery mode.

From a long term perspective, on one hand, the Indian economy continues to have a great potential for growth and on the other, the travel and tourism industry has been recognised as having the fastest growth rate in the world. The company is distinctly poised to take advantage of emerging trends as soon as economic indices start improving. Many Indian states have commenced efforts to improve their tourism infrastructure and this is likely to have beneficial effects before long. The company has rolled out the IT based technology platform (ITH SMART) across all its operational branches. Based upon this, an integrated platform for distributing the company’s services to retail and individual customers would be developed. This would ensure that the company continues to occupy its rightful place as a major player in the Industry and is able to exploit future growth opportunities

The ITHL stock looks undervalued in comparison to its listed peers such as Thomas Cook, Cox & Kings, Mahindra Holidays Etc.. Investors can start accumulating the ITHL at current levels and add more on declines for decent returns of 40%-50% over the next 8-12 months.

Sanjay Chhabria is an equity analyst and investment consultant based at Raipur (Chhattisgarh). He is a registered Research Analyst as per SEBI (Research Analyst) Regulations, 2014 (Registration No. INH000001592). At the time of writing this, he doesn’t have any position in the stocks mentioned above. He welcomes comments, feedback & investor queries at [email protected] and at 9893200307.

Sanjay chhabria is bringing a weekly Investment newsletter “Market-View” since April 2001 to help small(retail) investors take an informed investment decision. He invites Readers to send him email/Whatasapp message (9893200307) to get free 1 week trial offer of “Market –View”.

Under no circumstances does the information in this report represent a recommendation to buy or sell stocks. This report has been prepared solely for information purposes and does not constitute a solicitation to any person to buy or sell a security. While the information contained therein has been obtained from sources believed to be reliable, no responsibility (or liability) is accepted for the accuracy of its contents. Readers using the information contained herein are solely responsible for their actions and are advised to satisfy themselves before making any investments.


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