Tourism Finance Corporation of India Ltd “Financing Tourism Projects”

Author: Bappaditta Jana

TFCI was set up in 1988 to expedite the growth of tourism infrastructure in the country by providing credit on a long-term basis to tourism related projects in the country. TFCI provides financial assistance by way of rupee loans, subscription to equity/debentures and corporate loans mainly for hotel projects, amusement parks, ropeways, multiplexes, restaurants etc.TFCI is one of the Multibagger stocks, identified by Dynamic Levels Research based on technical and fundamental research.Tourism Finance share price has touched a 52 week high of Rs. 69.20 on 06-Jan-2016 and a 52 week low of Rs. 34.75 on 24-May-2016, and is currently trading at Rs.51.

Share HoldingThe promoters holding in the company stood at 56.33% & Institutions and Non-Institutions own 5.73% and 37.93% respectively.

Financial AnalysisQuarterly ResultsDuring the quarter ended 30th June 2016, the total income from operations of TFCI reported a growth of 47.81% on Q-o-Q basis and stood at Rs. 53.95 crores against Rs. 36.50 crore for the quarter ended 31st March 2016.The operating profit of TFCI for the quarter ended 30th June 2016 stood at Rs. 48.90 crores against Rs. 31.38 crore for the quarter ended 31st March 2016, growing by 55.83%PAT increased by 520% and stood at Rs. 20.16 crore for the quarter ended 30th June 2016 against Rs. 3.25 crore for the quarter ended 31st March 2016,EPS grew by 525% and stood at Rs. 2.50 for Q1FY17 against Re. 0.40 for the quarter ended 31st March 2016. Annual Result Analysis:The net sales of TFCI for FY16 stood at Rs.175.13 crore compared to Rs.171.73 crore in FY15, growth of 1.98%The operating profit stood at Rs. 131.19 crores in FY16 against Rs.151.18 crore in FY15, de-growth of 13%PAT stood at Rs. 53.61 crores in FY16 against Rs. 60.18 crore in FY15. PAT for the year was down by 11%EPS also came down by 11% and stood at Rs. 6.64 for FY16 against Rs.7.46 for FY15

Investment Rationale

  • With a wide range of hotels chains lined up for their expansion plans the tourism and hospitality sector in India is highly optimistic.
  • World Travel and Tourism Council forecasts that the tourism industry in India is likely to grow at a much faster rate in India compared to other South East Asian countries.
  • India is one of the biggest travel and tourism economies in the world and contributes significantly to economic wealth and job creation.
  • TFCI has started focusing on consulting assignment which will help in generating fee-based income.
  • India is expected to invest about Rs.448 billion in the hospitality industry in the next five years
  • As of the quarter ended 30th June 2016 around 16 Mutual Funds have made investments in TFCI which shows that the stock is in strong hands. TFCI has growing EPS on a QoQ basis.

Investment OpinionAt CMP Rs. 51 the share price of TFCI is trading at a P/E of 6.58 and TFCI has a market cap of Rs. 379.37 crore, we recommend a buy on the stock with a price target of Rs. 62 for a medium term outlook