Chairman Raymond Bickson, told shareholders that expert forecasts indicate the demand for hotel rooms to outpace supply.
"Sri Lanka is set to change from a budget destination to a more exotic one offering a variety of experiences to a diverse segment of travelers," he said.
Taj was also supportive of a state intervention to set minimum prices for a five star hotel, a move that has attracted criticism from some sections of the industry as it restricts their pricing freedoms.
To escape the rule, hotels have to avoid being classified as a 'five star' property.
The firm which operates a hotel in by the Galle Face beachfront in Sri Lanka's capital Colombo reported profits of 124 million rupees in the year to March 2012, up from 99 million a year earlier, giving earnings of 89 cents per share.
The stock last traded at 27.60 rupees.
The profits came despite finance expenses surging to 97 million rupees from 20 million a year earlier due to exchange losses on a foreign loan as th