Simple answer is NO.

Here are reasons

1. Stock trading at high p/e of more than 45.

2. Margin pressure continues.

3. High debt burden (more interest payment for those loans )

Mr Tata talked about other sources of fund like equity or quasi equity, if they go for equity it will dilute current shareholders value.

Even though business has been slow IHL has continued on its expansion plans so far.

Some new properties are expected to come online.

    * Taj Falaknuma Palace, Hyderabad 60 rooms Dec-09
    * Yeshwantpur 331 rooms Feb-10
    * Taj Lands End Expansion, Mumbai 120 rooms Sep-09
    * Pierre renovation (IHMS Inc.) 184 rooms Jun-09
    * Taj Palace, Cape Town (Taj International SA) 172 rooms Dec-09
    * Fishcove Expansion, Chennai (Oriental Hotels Ltd.) 64 rooms Oct-09

That will definitely add to topline. But bottom line and shareholders value will remain a big question. While we do understand that Hotel is capital intensive industry, managing profit margin is key. It’s like renting a home for more then what you have to pay for home loan interest. If you rent for less that generates a negative cash flow.

IHCL has target of setting up 45 hotels, which includes an addition of more than 7,200 rooms over the next four years.

That seems to be an aggressive expansion plan. It can go very well if they can generate good cash flow from recent acquired properties in San Francisco and New York.

 Concerns about hotel industry includes following .
 

• Metros will witness an oversupply situation after four to five years.

• The Average room rates (ARR) also declined by 19% YoY to Rs 10,398 in March 2009 whereas occupancy levels for the said period declined YoY from 78% to 66%.

• The hotel industry is expected to have a tough FY10. As per WTTC, the travel GDP is expected to decline by 3.5%. The hotel players may witness a RevPAR fall of 10% to 15% during the year.

• CRISIL Research expects the profitability of premium hotels to be hit hard by a sharp decline in occupancy rates and room rates. Margin will under huge pressure.It expects demand to decline by 15.5% YoY in 2009-10. This is going to affect the profitability of the sector. The hotel companies are already facing cash flow pressure. The balance sheets of the hotel companies are under stress on account of acquisitions of land banks and rising debt levels.

• Five star hotels may soon be commodity. With over supply and similar service level, there will be hardly any pricing power.

I strongly think that you will get better opportunity to get into this stock .