Buzzing stock : Indian Hotel Company to raise Rs 1,500 crore through right issue

In yesterday’s board meeting, the board of directors The Indian Hotel Company approved the right issue of Rs 1,500 crore. The purpose of this right issue is to meet the long-term financing need of capital expenditure, growth plans, and debt repayment. The company’s total debt as on March 31, 2017 was approximately Rs 2,808 crore.

The right issue is nothing but raising additional capital by issuing new securities to the existing shareholders. Furthermore, the company has plans to open 21 new hotels, out of which 10 properties would be under the brand ‘Taj’ and 11 would be under the ‘Ginger’ brand.

In the recently concluded quarter, Q1FY18, the company reported net sales of Rs 907.3 crore, down by about 4% on a YoY basis. However, in terms of the bottomline, the company managed to bring down its losses substantially to about Rs 25 crore from net loss of about Rs 167 crore in Q1FY17.

However, traders seem not impressed with this development; hence, the stock of Indian Hotel Company plunged as much as 10% to touch intraday low of Rs 108.35 on the BSE. The stock at 14.05 hours was trading at Rs 111.2, down by 7.5 per cent.