- Date : 17/03/2023
- Read: 4 mins
The growth in the travel and tourism industry is expected to benefit stocks such as RVNL, Interglobe Aviation Limited, IRCTC, IRFC, GMR Airports Infrastructure Limited, etc.
During Budget 2023, the Finance Minister made two important announcements related to the travel industry. She said the tourism industry would get Rs. 2,400 crores, and the government would focus on developing 50 tourism destinations. The second announcement allocated Rs. 10 lakh crores capital expenditure for infrastructure development. It involves developing airports and railway stations, laying railway lines, building highways, etc. Both announcements will give a big push to the hospitality industry. In this article, we will understand travel stocks you should bet on in 2023 to benefit from the upcoming travel industry boom.
Travel stocks to bet on in 2023
As per a World Travel & Tourism Council (WTTC) research report, India’s travel and tourism industry is expected to see a 20.7% year-on-year growth in 2024. After the Covid pandemic, many people are travelling, and the numbers are growing sustainably. The number of air travellers has reached record highs. Let us look at some transport industry stocks that are expected to benefit from the tourism boost up by the government.
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1) Rail Vikas Nigam Limited (RVNL)
The last one year has been good for most railway stocks. Rail Vikas Nigam Limited (RVNL) has been a star performer in this category in the last one year.
Chart: RVNL 1-year performance
(Source: Google)
The above chart shows how RVNL has been among the top-performing travel stocks in the last one year with 119% returns. Recently, in the February 2023 conference call, Rajesh Prasad, an RVNL Director, said that the company is projected to have an order book of around Rs. 55,000 - 60,000 by 31st March 2023. So, the company has good visibility for the next few years and can be a good compounding story.
Also, the company is regularly bidding and winning new orders. In the 1st week of March 2023, RVNL and its consortium partner Russia's CJSC Transmashholding emerged as the lowest bidder for manufacturing and maintaining 200 Vande Bharat Express sleeper trains, a project worth Rs. 58,000 crores.
2) Interglobe Aviation Limited
In January 2023, India recorded overall domestic air passenger traffic of 1.25 crore, an annual growth of 95.72%. Most airlines reported passenger load factors (PLF) in the range of 90%. In the future, these growth rates are expected to go up further. Interglobe Aviation Limited (owner of Indigo Airlines), with a market share of more than 50%, is expected to be one of the biggest beneficiaries of the rapid growth in India’s air passenger traffic.
Chart: Interglobe Aviation Limited 1-year performance
(Source: Google)
The above chart shows Interglobe Aviation Limited 1 year performance has been decent with 15% returns. Going ahead, as the aviation sector grows, Interglobe Aviation Limited is expected to do well.
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Apart from RVNL and Interglobe Aviation, other travel stocks that are expected to do well in 2023 include:
1) Indian Railway Catering and Tourism Corporation Limited (IRCTC) has a monopoly on internet ticketing. It also has other businesses, such as catering & hospitality, travel & tourism, packaged drinking water, etc., that are growing rapidly. With the increase in the number of new trains being rolled out by the Indian railways, the IRCTC stock will benefit from an increase in ticketing volumes.
2) Indian Railway Finance Corporation Limited (IRFC): It is the dedicated funding arm of Indian Railways. IRFC will directly benefit from the new locomotives, passenger coaches, and wagons procured by the Indian Railways.
3) GMR Airports Infrastructure Limited: The company is currently Asia's largest private airport operator. In India, it manages airports such as Delhi International Airport, Hyderabad International Airport, Goa International Airport, etc. GMR Airports will be one of the biggest beneficiaries as air passenger traffic increases in India.
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Government focus on infrastructure development: Travel stocks are expected to take off
We saw with Budget 2023 how the government has a big focus on infrastructure development and promoting tourism. With the government outlay of Rs. 10 lakh crores for infrastructure development, the biggest beneficiaries will be airport developers, airlines, railway companies, road developers, port companies, etc. Hence, investing in travel stocks as a theme for wealth creation is expected to do well. You may allocate some portion of your portfolio to travel stocks and let them take you places.
Disclaimer: This article is intended for general information purposes only and should not be construed as investment or legal advice. You should separately obtain independent advice when making decisions in these areas.
