Ram Mandir Pran Pratishtha: Jefferies expects a dozen stocks to benefit from Ayodhya tourism

Global brokerage firm Jefferies believes that Ram Mandir Pran Patishtha (Grand opening of Lord Rama's temple) in Ayodhya on Monday will have a large impact on the Indian economy as well. It believes that Ayodhya is set to become India's latest tourist spot, with the potential to attract more than 50 million tourists a year.

The expenditure of $10 billion on makeover of its infrastructure including new airport, revam new airport, revamped railway station, township, improved road connectivity and more will likely drive a multiplier effect with new hotels and other economic activities. It can also set a template for infra driven growth for tourism, said Jefferies in its latest report.

Tourism contributed $194 billion to FY19 (pre-COVID) GDP and is expected to grow at an 8 per cent CAGR to $443 billion by FY33. Tourism to GDP ratio in India at 6.8 per cent of GDP, puts it below most of the large emerging/developed economies. However, religious tourism is still the biggest segment of tourism in India. Popular religious centres attract 10-30 million tourists annually despite the existing infrastructural bottlenecks, said the global brokerage.

Forbes ranked India as seventh most beautiful countries in the world among the 50 nations in 2022. India has 42 UNESCO World Heritage sites and ranks sixth globally The creation of a new religious tourist centre as Ayodhya, with improved connectivity and infrastructure can create a meaningfully large economic impact.

The Ram Mandir pran-pratishtha is set to transform the ancient city of Ayodhya to a global religious and spiritual tourist hotspot, which comes up at the cost of Rs 1,800 crore. Tourism is projected to surge and increased economic and religious migration to Ayodhya, multiple sectors stand to benefit including hotels, airlines, hospitality, FMCG, travel, cement, said Jefferies' analyst.

The brokerage said that demand is outstripping supply as Ayodhya has 17 hotels with about 590 rooms at present 73 new hotels in the pipeline, of which 40 are under construction. IHCL, Marriott International, Wyndham and others have already signed deals for hotels and IHCL has signed contracts for two new properties in Ayodhya. ITC and OYO are also actively scouting opportunities.

Religious and pilgrimage sites present significant captive markets offering strategic first-mover advantage. QSR chains such as Restaurant Brands Asia (RBA), Devyani International, Jubilant Foods are either in discussions to set up outlets or have already begun setting up outlets. Burger King set up one store in the city centre in 1H of 2023, it said.

"Among the travel service providers, Indigo announced Ayodhya as its 86th domestic destination with direct flights from Delhi, Ahmedabad & Mumbai. Air India, announced direct flights from Bengaluru, Kolkata & Delh. Spicejet and Akasa Air also announced flights connecting Ayodhya with multiple cities. IRCTC announced tour packages to Ayodhya," added the report.

Jefferies has picked Indian Hotel Company and EIH as the potential beneficiaries from hotel space, while it sees ITC, Jubilant Foodworks, Britannia Industries, Godrej Consumer, Westlife Foodworld, Hindustan Unilever, Devyani International and Sapphire Foods from the FMCG and QSR space. InterGlobe Aviation (Indigo), SpiceJet, IRCTC and Ease My Trip shall benefit from the travel sector, it said.

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