Asian Hotels

Posted at December 1, 2009 written by Ayush

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About Asian Hotels:

· They operate three 5 star deluxe category hotels. Locations: Delhi, Mumbai & Kolkattta.

· They operate the Hyatt Regency brand on the above three locations.

The stock is still undervalued based on the following logics:

· The hotel sector is also recovering with the upturn in the economy. Going by the latest newspaper headlines, occupancies are back to 85% though ARRs are still 10-20% below normal peak levels. Hotels stocks are still down more than 50% below the crash levels.

· Usually the per room cost (excluding land cost) is considered to be 1 Cr for a good 5 star property. Asian Hotels has 1144 rooms in total and at CMP of 420, the per room M Cap works out to be around 80 lac only.

· The company is believed to have aggressive expansion plans post demerger

Demerger:

The most noticeable point based on the latest demerger scheme is – Promoters are going to infuse Rs. 341 Cr before the demerger by taking a preferential allotment @ 540…while CMP is 420.

Post demerger, the three hotels i.e. at Delhi, Mumbai & Kolkatta will get listed separately. So a shareholder holding 3 shares of Asian Hotels currently will get 1 share each of each of the separate entity.

Since long Asian Hotels hasn’t expanded its hotel base. It is said that there were conflicts between the promoters and hence the company wasn’t aggressive. With the demerger, the negative synergy should be removed.

The unlocking of the hidden value for the current shareholders can be expected with this demerger.

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  • Ayush
    Hi Mukesh,

    As per the scheme of arrangement, every shareholder holding 100 shares is to get 50 shares each of new 3 companies.

    In your case you should have got 3 shares of Asian Hotels North, Asian Hotels West and Asian Hotels East, each.

    Asian Hotels North is listed and trading at around 450. Other two should get listed in a month.
  • Mukesh Jain
    sir, as a small investor i hold 6 shares of asian hotels can you tell me how much quantities of different entities i get in future , as it created a confusion for me and also when the other two companies listed.

    ---Mukesh jain
  • kumar
    sir,

    thank u very much for your kind reply,

    awaiting your updates,

    KUMAR.
  • Hi Kumar,

    Once the demerger (or spin-off) takes place, the currently listed company will be delisted and shares of three new companies will be issued in equal proportions.

    The details regarding the rates and dates are yet not final. We will surely inform about the updates once the demerger process begins.

    -Pratyush
  • kumar
    sir,

    holding asian hotels on your recomendation,i would like to know whether asian hotels also will be delisted and the three companys shre will be listed ?
    approximately when will the two other hotels listed and at what rate ?.

    pls share your info.
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