Best Cruise Line Stocks

The Indian government is aiming to increase cruise passenger traffic from 0.4 million at present to 4 million under its Maritime Vision Document 2030. The government has also taken several initiatives including infrastructure upgradation, rationalisation of port fees, removing ousting charges, granting priority berthing to cruise ships and providing e-visa facilities to boost cruise tourism in the country. All these initiatives will help cruise companies in India and their stocks.

What are cruise line stocks?

There is no company listed in India that deals only on cruise lines, but there are a few that have some kind of tie-ups or run some cruise lines, mostly river-based. These are mostly hospitality industry companies that we are going to concentrate on for their cruise line operations, direct and indirect both. These cruise line stocks mostly have tie-ups with foreign cruise liners for Indian clients and for their hotels abroad.

Overview of top cruise line stocks

EIH Ltd: EIH runs Oberoi and Trident hotels and is also a rare company from India to run a direct cruise liner—The Oberoi Zahra, Luxury Nile Cruiser. The stock has shown positive breakout beyond third resistance. It has also shown high EPS growth and its return on equity, or ROE, and RoCE have been improving for the last two years.

Indian Hotels: It is one of the oldest hotels companies of India, which among other properties owns and runs the Taj group of hotels. It offers a variety of cruises by its hotel in Kochi along the backwaters. It has also formed an alliance with Silversea Cruises of Italy. The company has low debt and the stock has returned high EPS growth. However, earnings have been under pressure for the past few quarters, leading to lower shareholding by mutual funds.

Indian Railway Catering & Tourism Corporation: The state-owned ticket booking and tour company offers many cruise tours in India and abroad through various tie-ups. IRCTC had also tied up with Cordelia Cruises to launch India's first indigenous cruise liner. The stock has seen both its return on equity (RoE) and return on capital employed (RoCE) improving over the past two years, attracting increased interest from FIIs and FPIs.

Easy Trip Planners: Essentially an online ticket booking site and hotel aggregator, the company also offers various cruise trips on its website easemytrip.com. The company is also set to acquire a stake in Guideline Travels Holidays India, which has pioneered cruise ticket selling in India. The company has low debt but has seen decreased interest from investors. The stock price is also below short-, medium- and long-term averages due to weak financials.

Thomas Cook (India): The company offers one of the most extensive cruise holidays in India and abroad. The stock is near a 52-week high and is also above short-, medium- and long-term averages. The company has shown strong EPS growth and its RoE and ROA (return on assets) have been improving over the last two years. The stock has shown strong recovery from a 52-week low. 

Why invest in cruise line stocks?

The tourism sector has seen a renewed interest after the Covid-19 pandemic, with people trying out different destinations and looking for new experiences. India has a huge maritime coast and inland waterways, offering great opportunities in cruise line stocks. These companies can also tie up with global players to launch foreign tours.

Factors to consider before investing in cruise line stocks 

Geopolitical Risks: Geopolitical tensions, such as war between two countries, can take a toll on tourism and have a cascading impact on cruise line stocks, too.

Fuel Prices: As cruise ships rely heavily on fuel, consider the volatility of fuel prices and the company's strategies for mitigating these costs.

Regulatory Compliance: Ensure that the company complies with international and regional maritime regulations.

Brand Strength: Evaluate the strength of the company’s brand and its reputation in the market.

Industry Alliances: Consider any strategic partnerships or alliances that could strengthen the company’s market position.

Market Sentiment: Gauge the overall market sentiment and analyst opinions on the stock.

Financials: One should look carefully at the financials of such companies before investment.

Peer Comparison: Invest in a company that has some kind of leverage over its peers and has gained substantial market share.

Performance overview of cruise line stocks

Conclusion

Cruise line stocks can be a good investment option due to the industry’s potential for robust growth, especially as global tourism continues to expand.

When evaluating the best stocks in this sector, it’s important to look at companies that demonstrate innovative cruising experiences, modern fleets, and a strong global presence.

Also, as India has hardly any standalone fleet operator, the top cruise stocks are made up of mostly hotel or ticketing companies that have tie-ups with global players. This makes it imperative to look at the growth prospects of their main business before making any investment decision.