NEW DELHI, Nov 27: The rupee depreciation could not have come at a better time, especially for the hotel industry. Software and hotel sectors, among the biggest forex earners, are expected to report fatter bottomlines for the second half of the current fiscal on account of the continuous slide in the value of the rupee against the greenback.

The rupee has slipped by almost eight per cent (Rs 3) to approximately Rs 38.5 to a dollar since the beginning of the current financial year. The stock markets have been quick to calculate the expected fillip to earnings for these sectors on account of the rupee depreciation. Among the hotel scrips, Indian Hotels, EIH Ltd, Asian Hotels and Leela have shown signs of a turnaround after tumbling to new lows.

Among the software scrips, Aptech, CMC, NIIT, Infosys, Satyam Computers and Tata Infotech are on the rise again after a brief slowdown. Aptech has shot up by from Rs 456 to Rs 515 in the last two days, CMC has spurted by Rs 15 to Rs 83.50, Infosys from Rs 1,375 to Rs 1,428, NIIT by Rs 44 to Rs 641 and Satyam Computers by Rs 13 to Rs 160. In the hotel sector, Asian Hotels and Hotel Leela will be the major beneficiaries, as more than 85 per cent of their income comes from foreign exchange. Even in the case of smaller hotels like EIH Associated and Indian Resort, the forex component accounts for 80 per cent of the total income.

In the software segment, Infosys and DSQ Software have a forex earning component of around 80 per cent in their turnover. Most of the earnings in the case of smaller software companies like PSI Data Systems and Leading Edge also come from foreign exchange earnings.

Although the hotel industry is witnessing a lean patch, the depreciation in rupee is expected to prop up the forex earnings of hotel majors. Besides, the second half is normally better for hotel companies on account of larger tourist inflows. The first half performance by the hotel majors did not spring any surprise. Falling occupancy levels and lower average room realisations (ARRs) took their toll on the performance of hotel companies. Hotel scrips, too, were battered to new lows. Scrips of Bharat Hotels and Hotel Leela have fallen by more than half in the last few months and consequently touched their four-year lows.

Hotel Leela's scrip has tumbled from Rs 110 to less than Rs 50 and that of Bharat Hotels from Rs 115 to Rs 45. Forced by low occupancy rates, most hotel companies also skipped the customary hike in room tariffs for the busy season, which began in October. This would have had a twin impact on the hotel companies since they would have to contend with lower tariffs.

To add to their woes, low volumes due to poor occupancy rates are likely to result in substantially lower revenue realisations. But the rupee depreciation over the past few weeks has given some hope to the hotel sector.For the software industry, which has witnessed a phenomenal growth in the last couple of years, the depreciation will only give a further push to earning prospects.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.