thks for a gr report sahay and basant  as 1250rooms come up ihl, and the smaller listed cos and mncs are also going to increas rooms  so i feel an arr of 6500-7000 would be more realistic. that still translates into a mkt cap of 1000crs,an execptionally ood mngnt can see the mkt cap still higher.chennaiwill be room surplus by 09 while hyd will continue to be room def.i did buy my first lot last week when i heard the merger news.

Never said I did not have a good view but Leela seems discovered while Viceroy's story is yet to be out in public!

Thanx Basantji...

I believe that as rule of thumb the cost of adding a room in the hotel industry is typically 1000 times the daily rack rate.  So if Viceroy is adding 960 rooms with an average rate of say Rs. 7000, we are looking at an investment of 672 crores.

The company has already diluted equity and issued shares/warrants to ICICI Ventures and Rakesh Jhunjhunwala (around Rs. 80 a share).  Add to that additional debt of 500 crores to fund the massive room expansion.  The prospects for rapid EPS increase dont look too bright.

EIH (Oberoi) is a classic example of a hotel group whose bottomline was dragged by debt for a long time.

I am bullish about the Indian hotel industry but I still have some doubts about Viceroy.

P.S.  This is my first post.  I have been following The Equity Desk since its inception and must congratulate Basant for creating an excellent forum for reasoned and incisive analysis of Indian stocks.