The portfolio stock of Rakesh Jhunjhunwala Indian Hotels Company (IHCL) has jumped 24% so far this year, outperforming the benchmark Nifty 50 index which has fallen 11%. Brokerages are bullish on Indian hotel stocks after the company highlighted its efforts to grow its existing and new businesses and deploy capital efficiently to generate better returns in the FY22 annual report. IHCL shares were trading at Rs 229, up 2% on the NSE intraday. Indian Hotels is one of 33 stocks held by Big Bull Rakesh Jhunjhunwala in his portfolio. Rakesh Jhunjhunwala and his wife Rekha jointly own a 2.1% stake in this hotel and resort company as of March 31, 2022, according to the company’s BSE corporate filing.
Stock Talk: Should You Buy Indian Hotels Stock?
Motilal Oswal: Buy
Target Price: Rs 278, 30% upside
According to analysts at Motilal Oswal Financial Services, Indian Hotels’ asset-light model and new reinvented revenue-generating avenues with higher EBITDA margins bode well for an expansion of RoCE. “As with FY22, we expect a strong recovery in FY23 and FY24, driven by: (a) an improvement in ARR once economic activity normalizes; b) improved occupancy rates, driven by business travelers as well as the Leisure segment; c) cost rationalization efforts; d) an increase in F&B revenue as banquets/conferences normalize; and e) higher revenue from management contracts,” they said. The brokerage reiterated a ‘Buy’ rating on the stock with a target price based on SoTP of Rs 278 each, implying a 30% upside from Wednesday’s closing price of Rs 215.
ICICI titles: Buy
Target Price: Rs 284, Upside: 32%
Brokerage ICICI Securities maintained a call to buy on the stock with a target price of Rs 284 per share, translating into a 32% upside on Wednesday’s closing price of Rs 215. brokerage was of the opinion that the growth and margin objectives set by the management of the company are realistic. “As with FY22, we expect a strong recovery in FY23 and FY24, driven by improved ARR once economic activity normalizes, improved occupancy rates, cost rationalization efforts, increased F&B revenue as banquets/conferences normalize, and higher revenue from management contracts,” it said. The main upside risks are new Covid cases, which can impact demand and increased costs that weigh on margins.
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