What is fuelling Taragon Regency Hotel scrip?

ShareSansar, 2nd April

Both officials of Taragaon Regency Hotel as well as stock brokers have said that the huge surge in the share of the company is not supported by its actual growth.

TRH was traded at around the circuit level for the past few days and the turnover was among the highest.

“It kind of defies logic. We are not offering any dividend, nor are we have any capital increment plan like issuance of right shares at this moment. The growth, we guess, is simply fuelled by the sentiment that the hotel group will fare well in days to come,” said a senior official with TRH, which runs Hyatt Hotel.

TRH, with its negative net, has not even pledged any dividend to the shareholders for the last fiscal year. It is holding its Annual General Meeting on April 11.

President of the Brokers’ Association of Nepal Narendra Sijapati opines that one of reasons the price of TRH scrips could be new-found interest of the investors in the company following a huge transaction a few days back, plus the gradual focus shift in the market toward insurance, hotel and hydropower groups from the commercial banks.

“The massive transaction in TRH shares the other day was actually the move of the consortium of banks to square off the scrips of the hotel which it had offered to the banks after struggling to repay their loan,” says Sijapati. “But the general investors could have taken it as an indication of interest of some major buyers in the hotel.”

Stock market analysts also said that even the surge witnessed in the price of other companies under the hotel group is not justified as none of them, except Soaltee Hotel, are faring well.

Nevertheless, the investors’ confidence cannot be completely dismissed as unfounded as the hotel industry is apparently emerging from the crisis following relative political stability in the country, and more and more business houses are vying to open star-rated hotels while many of the existing ones are trying to expand their service.

For instance all the leading hotels are operating at almost full occupancy at this time.