Rakesh Jhunjhunwala-owned Indian Hotels stock price has soared 36% so far this year to trade at Rs 250 per share. The hospitality sector stock has benefitted from the opening of Indian borders for foreign travellers and the settling down of covid-19 regulations. According to analysts at ICICI Securities the stock is ‘in fine fettle’ and well poised to benefit from the expected recovery in the hotel business cycle. The brokerage firm has reiterated its ‘Buy’ rating on the scrip. Big Bull Rakesh Jhunjhunwala owns a 2.16% stake in Indian Hotels along with his wife Rekha Jhunjhunwala.
The brokerage firm has pinned a target price of Rs 285 per share on Indian Hotels, up 14% from the current market price of Rs 250 per share.
Net cash company in the making?
Analysts said that Indian Hotel’s recent deleveraging efforts have bore fruit. The company, faced with multiple covid waves, saw its net debt rise to Rs 35.7 billion at the end of September 2021 against Rs 19.2 billion as of March 2020. Indian Hotels has, since then, raised Rs 19.8 billion in December last year through a rights issue and a subsequent fundraise of Rs 20 billion last month through a QIP which may result in Indian Hotels being a net cash company at the end of the previous fiscal year. From here on, Indian Hotels can use the free cash flow generated to tap growth opportunities or serve as a buffer to weather any fresh Covid induced disruptions in the near term, ICICI Securities said.
Demand recovery ahead, estimates raised
While covid-19 waves remain a key worry for the future, analysts are still modelling demand recovery from the first half of this fiscal year. Keeping this recovery in mind revenue estimates for FY22/23/24E have been increased by 8/18/8%. “… factoring in a stronger than expected demand recovery in first half of this financial year to pre-Covid levels with FY23E consolidated revenue expected to grow 54% on-year to Rs 45.2 billion or 100% of FY20 levels,” ICICI Securities said.
Rakesh Jhunjhunwala owned stock
Ace investor Rakesh Jhunjhunwala owns 1.16% stake in the company along with his wife Rekha Jhunjhunwala. The billionaire investor owns a total of 2.88 crore equity shares of Indian Hotels. In the October-December quarter, both Rakesh Jhunjhuwala and his wife had bought more shares of Indian Hotels.
