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Unlock beneficiaries: Stage set for structural uptrend

ICICI Securities 11 Mar 2022

What’s Buzzing:

The central government as well as state governments are further relaxing the Covid-19 related restrictions that will allow public gatherings, benefitting many businesses that were impacted over two years. Has the price already discounted the same or is there more juice left?

Context:

Businesses across travel, cinema exhibition segments have been adversely impacted over the past couple of years. Companies operating in these sectors, especially hotels, have been underperforming over the past several years dating back even to the pre-Covid period and have undergone significant price/time correction. Many stocks are now breaking out of their multi-year consolidation phase, indicating a structural turnaround. Historically, such breakouts were followed by significant returns to the tune of 30-40% over a few quarters, thus leading to outperformance. These sectors have exhibited relative outperformance in the ongoing corrective phase indicating inherent strength. They are expected to resume their uptrend as soon as anxiety around geopolitical events cools off.

Our Perspective:

Our bottom up statistical models and long term chart structure studies of these sectoral players reveal that these sectors, benefitting from a complete unlock of the economy, are expected to outperform over the medium term and should form part of the portfolio. We remain constructive on companies from hospitality/leisure sector like Easy Trip Planners, Lemon Tree Hotels, Oriental Hotels, Taj GVK Hotels and Resorts, EIH Ltd, VIP Industries, Inox Leisure along with consumption proxies like Phoenix Mills and United Spirits.

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