EIH found few takers today, as the scrip plummeted 4.6% to Rs 168.50, after the company said net profit had dropped 10.6%.

The scrip is generally thinly traded and, today, was no exception as it notched up just 7,700 shares as volumes . The hospitability major, EIH , is part of the Oberoi group of hotels.

The fall in EIH today follows a recovery that took place over the last few sessions. From Rs 155.70 on 14 May 2003, the stock surged 14.8% to a recent peak of Rs 178.80 on 25 June 2003.

EIH reported 10.6% fall in its Q4 ended 31 March 2003 net profit to Rs 17.42 crore compared to Rs 19.50 crore in the quarter ended 31 March 2002. Total income went up 11.7% to Rs 134.74 crore (Rs 120.61 crore).

For FY 2002-03, EIH's net profit plunged 56% to Rs 15.47 crore (Rs 35.56 crore). Total income went up to Rs 435.28 crore from Rs 427.33 crore.

The hotel industry has been witnessing pressure on average room rents (ARRs) even though occupancy is on the rise.

Occupancy is expected to continue to show an upward trend, while ARRs are expected to increase in the second half of the current financial year (2003-04), according to industry sources. The broad trend of higher occupancies relative to the previous year, as seen in Q4, continues in Q1.

In FY 2003-04, hotel companies expect occupancy led growth. ARRs are also expected to improve gradually.

Also, barring those in north Mumbai, no major capacities are coming up. This means that competition will not increase and there will be no excess capacities.