Hot Stocks to Watch: Ayodhya Temple Boost

Ayodhya is getting ready for the big day when the Ram Temple will be inaugurated on January 22. Over 7,000 people, including politicians, celebrities, and important figures from different countries, will be there. The celebrations will last for seven days with various rituals happening each day. But it's not just a cultural event; it's also creating a buzz in the business world, catching the interest of investors worldwide.

The hospitality, travel, and tourism industry are gearing up for a significant increase in visitors. Around 20,000 new jobs are being created to handle the lakhs of tourists expected after the inauguration. To give you an idea, the Tirupati Balaji Temple, which is always crowded, attracts around 50,000 people daily and even more on special days. Ayodhya's Ram Temple is expected to see anywhere from 300,000 to 700,000 people in the first week after the inauguration.

If 2-3 lakh people visit the Ayodhya temple every day in the coming years, as estimated, it means big business for hotels, restaurants, and travel services. Some business leaders, like Oyo Hotels & Homes' founder Ritesh Agarwal, see Ayodhya becoming a major religious tourism destination, similar to the Vatican or Mecca. This anticipation has led to a demand for stocks related to the "Ayodhya theme" from investors and advisory firms.

Travel: Roads, Rails & Skies Affecting Stocks

As per reports, In the coming years, more than three lakh people are expected to visit Ayodhya daily Estimates suggest approximately 45 lakh tourists could visit Ayodhya annually, marking an 80% increase from the usual influx in the city of Ram's birth. 

Ayodhya is anticipated to become a global tourism destination with a focus on spiritual, cultural, heritage assets and events as the city is likely to grow manifold with a significant demand in hospitality and allied industries.

This surge in visitors is translating into a remarkable upswing in online bookings for flights, cabs, buses, and trains.

Let’s discuss these top stocks if you should invest in them:

Breaking down the travel sector into three major categories, we witness significant growth

Railway Stocks

Indian Railways has announced plans to run over 1,000 trains nationwide, with Ayodhya as the final destination. This strategic move aims to provide easy access to visitors from major and minor cities alike. 

Indian Railway Catering and Tourism Corporation Ltd. (IRCTC):

One standout performer in the stock market is the Indian Railway Catering and Tourism Corporation Ltd. (IRCTC), which witnessed a 3.7% absolute return in just the first week of January. Responsible for catering services on Indian Railways' trains and online railway ticketing, IRCTC is poised for substantial gains.

Besides IRCTC, Rail Vikas Nigam Ltd. and Transport Corporation of India have seen rises in absolute returns, indicating the railway sector's proactive stance in capitalizing on the occasion.

Airline Stocks 

The airline sector is abuzz with the establishment of the Shri Ram International Airport in Ayodhya. Operational since January 10, 2024, IndiGo, under InterGlobe Aviation Ltd., has taken the lead by initiating direct flights from Tier-I cities like Delhi and Ahmedabad to Ayodhya. Commencing on January 15, 2024, these flights are expected to further elevate InterGlobe Aviation's share prices.

Tourism Stocks 

Ayodhya's prominence as a one-stop destination for booking hotels, buses, flights, and train tickets has catapulted the tourism sector. EaseMyTrip and Thomas Cook stand atop this burgeoning pyramid. 

EaseMyTrip:

It has recorded an impressive absolute return of 16.6% in the last one month. The surge in demand has prompted these online service providers to go all out, reshaping the industry landscape.

Thomas Cook:

The tour operating company has witnessed its stocks surge 122% in the last one year. The company is set to benefit from the Ram Mandir inauguration as it has launched exclusive Ayodhya packages like Varanasi – Prayagraj – Ayodhya

Hospitality Sector: Hotels & Resorts in Abundance

Ayodhya is buzzing with a surge in demand for hotel rooms, especially during the inaugural month, January, when room rates soar to ₹15,000 to ₹30,000 per night. The city's charm attracts visitors, filling up hotel rooms and resorts to near full capacity. Notably, big-name hotel brands are making their mark in Ayodhya, with around 50 major hotel projects currently in progress.

Official sources reveal that Ayodhya is gearing up for a significant investment of approximately Rs 420 crore through four major hotel projects. This boom in the hospitality sector is not only good news for the city but also presents promising opportunities for stock investments in the industry. The stocks that are set to benefit are

Praveg Ltd.:

This Gujarat-based eco-responsible luxury tourism and hospitality firm is making headlines with its tent cities and luxury resorts strategically positioned near the Ram Mandir. With 75% pre-sold occupancy, Praveg Ltd.'s stock has surged, delivering a remarkable 221% return since last year. The company, diversified into construction, engineering, and real estate development, has witnessed a 69% return in the last one month. The key driver? Winning a ten-year contract for the tent city in Ayodhya.

Indian Hotels Company Ltd. (IHCL):

IHCL, whose share price has increased 18% in the last one, is poised to open Vivanta and Ginger branded hotels, heralding the city's first branded hospitality experience. Operating under the iconic Taj Hotels and Vivanta brands, IHCL manages a portfolio of over 250 hotels across India and abroad.

Apollo Sindoori Hotels:

Shares of Chennai-based Apollo Sindoori Hotels surged 47% in just the last one month. The hospitality service management and support services company is constructing a multi-level parking facility in Ayodhya, reflecting its strategic investment to accommodate visitor vehicles in Tedhi Bazar. The structure, spanning over 3,000 square meters, includes a rooftop area exclusively for restaurants, capable of accommodating over 1,000 devotees at once.

It isn’t just the hospitality and tourism industry, there are other companies that will directly benefit from the Ram Mandir inauguration. These include:

Genesys International:

Genesys International, a mapping technology solutions provider, witnessed a 7% surge in its shares on Tuesday. The company's product was chosen as the official map for Ayodhya city, solidifying its position in the city's transformation.

L&T (Larsen & Toubro):

L&T, a giant in engineering and construction, has reached a new all-time high this week. With a market cap of ₹4.92 lakh crore, L&T's share price jumped from ₹1,080 on November 17, 2020, to ₹3,578 on January 17, 2024, marking a remarkable 231% jump. Since bagging the 'Shri Ram Janmabhoomi Temple' project in November 2020, L&T has been on an upward trajectory, showcasing the enduring impact of significant infrastructure projects on its stock performance.

The recent surge in "Ayodhya stocks" linked to the Ram Mandir inauguration might catch your eye, but it's crucial to approach with caution. These stocks are gaining heightened attention, and their valuations may not align with sound investment principles. Although companies like IHCL and Indigo are expected to enjoy long-term benefits from being early players in Ayodhya, seasoned investors stress the importance of thorough consideration before diving in.

Take Praveg, for example. Its price-to-earnings (PE) ratio is a whopping 116  as of January 17th, way higher than the broader hospitality industry's 33. The significant surge in Praveg's stock price over the past year has led experts to believe that much of its potential growth is already reflected in the current valuation.Here's a reality check: 

Praveg is valued at about Rs 2,547 crore, but it's pulling in less than Rs 100 crore ($12 million) in revenues.Therefore, despite the recent excitement around "Ayodhya stocks," it's essential for investors to exercise caution and conduct thorough evaluations before making investment decisions.So, before you jump on the "Ayodhya stocks'' bandwagon, remember to keep your investing hat on and do some serious homework. It might just save you from a wild roller coaster ride!