By Harshita Tyagi
India is hosting the 2023 ICC Men’s Cricket World Cup, beginning on October 5 and concluding on November 19. This will be the first men’s Cricket World Cup to be hosted solely by India.
According to industry and market experts, hosting a major sporting event like the Cricket World Cup can have a positive impact on several sectors and stocks in the host country. For stock market investors, the upcoming World Cup presents an excellent opportunity as the shares of several companies in the food and beverages, hospitality, and travel sectors are poised to benefit from this global quadrennial event.
Sectors that may benefit from ICC World Cup 2023
“We are positive about the QSR (Quick Service Restaurant) segment, optimistic about the aviation industry, and bullish on the hospitality and hotel sector. This optimism is not solely due to the G20 Summit but is also driven by several other upcoming events, not only this year but also in the coming years,” said Gaurang Shah, Senior Vice President at Geojit Financial Services.
“We have the festive season approaching, the Cricket World Cup being organised, and the wedding season ahead. Over the next few years, we anticipate a significant increase in the number of properties opening up for occupancy, leading to improved prospects for the hotel and hospitality industry,” he added.
Hospitality
Increased tourism and the influx of cricket fans from around the world can boost the hospitality sector, including hotels, restaurants, and travel companies. Stocks in companies like Indian Hotels Company Limited (IHCL) or Lemon tree Hotels might benefit. Analysts at Motilal Oswal noted that the improving travel trends coupled with multiple large global events such as the ICC Cricket Men’s World Cup are expected to push the demand higher for hotels in the upcoming quarters.
Hotel stocks to watch
“As a result, we expect that increased occupancy, combined with sustained momentum in ARR growth, will contribute to a strong performance for the majority of the hotel companies in FY24,” Motilal Oswal said. The brokerage has retained its ‘Buy’ rating on Indian Hotels Company (IHCL) stock with a target price of Rs 490 for FY25. It has also retained its ‘Buy’ rating on Lemon Tree Hotels with a target price of Rs 135 for FY25. Sharekhan analysts see up to an 18 percent upside in the Lemon Tree Hotels stock.
QSR stocks: Westlife Foodworld in focus
Like the hotel industry, another sector poised to benefit from the upcoming ICC World Cup and the festive season is the retail food industry, as fans who turn up to watch their favourite teams battle for the cup will likely spend money on food. For Quick Service Restaurants especially, the 3Q being a seasonally strong quarter, is expected to do well on the back of the festive season and the Cricket World Cup, said brokerage house Nirmal Bang in its report.
The brokerage continues to remain positive on Westlife Foodworld, considering its strong product portfolio at various price points across day parts. It has a ‘buy’ call on the stock with a target price of Rs 1,030.
“While reduction in raw material costs is expected to improve margins going ahead for all the QSR players, we remain cautious on other coverage companies like Jubilant FoodWorks and Restaurant Brands Asia considering the continuing weak trends in their sales,” said Nirmal Bang, keeping ‘accumulate’ rating on Jubilant FoodWorks and Restaurant Brands Asia stocks with target prices of Rs 520 and Rs 115 respectively.
Transportation stocks: IndiGo, IRCTC
Interglobe Aviation Limited, popularly known as IndiGo, is also likely to benefit from the World Cup as fare for selective flights can shoot up by an average of 80 percent on match days, according to a report by Jefferies.
“The World Cup event is coinciding with the seasonally strong 3Q for the hospitality industry. We checked hotel/flight rates across the venues for matches featuring India and found average rates for the match days up by 150 percent for select hotels and up 80 percent for select hotels/flights compared to the week prior to match day with some rates up to the extent of 13x/5x. For non-India match days, fares escalation is lower vs normal days,” it stated.
IndiGo enjoys a giant market share of around 63 percent (as of June 2023) in the Indian aviation sector. As of September 28, 2023, its shares were trading for 2,356.30 on NSE, up 15 percent YTD. The stock has delivered a return of nearly 30 percent in the last year, and the upsurge can continue in the upcoming months, according to analysts at Motilal Oswal.
“We remain positive on InterGlobe Aviation basis structurally favourable supply demand equation in India and the vantage position of IndiGo,” said ICICI Securities in a recent report.
Not everyone can afford to travel on flights in India. So, the other feasible option for them is the Indian Railways. IRCTC offers internet ticketing, catering, and tourism services exclusively to passengers travelling via Indian Railways. The company also offers budget accommodation through Rail Yatri Niwas and BNR Hotels. In the last six months, IRCTC share price has jumped 20 percent, and according to Motilal Oswal, further upsurge is expected in the next two to four months.
Beverages stock: Varun Beverages
Sales of beverages, especially those enjoyed while watching sports, can increase. According to Motilal Oswal, Varun Beverages (VBL), a PepsiCo distributor, can benefit from the ICC World Cup through increased soft drink sales, promotional campaigns, and potential partnerships. So far this year, share price of VBL has surged nearly 43 percent, and it may rally further depending on how well the company seizes the ICC World Cup 2023 opportunity while managing costs and competition.
Other sectors to watch
With the World Cup, there’s often increased demand for team jerseys, merchandise, and cricket-related apparel. Companies involved in sports apparel and merchandise can also benefit. Increased transportation of people and goods can benefit logistics and transportation companies. Investors can consider stocks in logistics companies or transportation companies. Sales of large-screen TVs, sound systems, and other consumer electronics often surge during sports events. Companies in this sector might benefit.