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Tata Group-backed Indian Hotels is a mutlibagger stock and has tripled investors' wealth in a span of two years. On Monday, the Tata stock extended its record high level. It was among the top midcap stocks to outperform benchmarks in a rally spree. Investors' wealth has risen by more than 3 times since September 2020. Late Rakesh Jhunjhunwala and his wife Rekha Jhunjhunwala are among the major public shareholders in the company. Indian Hotels still has a potential for further upside on markets as the hotel sector is well poised given the revenge travel trend post-Covid and the supply-demand situation getting favourable.
On BSE, Indian Hotels touched a new all-time high of ₹311.45 apiece. The shares were on a bullish tone throughout the day and gained by at least 5%. During the closing hours, Indian Hotels ended near the record high at ₹310.05 apiece up by ₹13.55 or 4.57%.
The company's market cap is around ₹44,039.49 crore.
Year-to-date, Indian Hotels shares have climbed by more than ₹127 or nearly 69% on Dalal Street. In a year, the shares have record triple-digit growth with an upside of 118.73%. The shares were around ₹142.46 on September 3 last year.
Further, Indian Hotels shares have made a strong recovery from the bearish tone due to the pandemic which resulted in a nationwide lockdown in 2020. The shares have climbed by more than 215% or 3.15 folds in 2 years. It was around ₹98.7 on September 4, 2020.
Indian Hotels is among the top 10 most valued stocks in late market mogul Rakesh Jhunjhunwala's portfolio. Although Rakesh who was often referred to as the 'Warren Buffett of India', died on August 14 due to health conditions. His estate including shares and property is passed on to his family.
As of June 30, 2022, Rakesh held 1,57,29,200 equity shares or 1.11%, while Rekha Jhunjhunwala holds 1,42,87,765 equity shares or 1.01%. Together, the couple has 30,016,965 equity shares or 2.1% of the company.
In Q1FY23, IHCL posted a net profit of ₹170.05 crore on a consolidated basis compared to ₹277.34 crore in Q1FY22. The Q1 PAT also climbed by 129.21% from ₹74.19 crore in Q4FY22. Consolidated revenue increased by a huge 267.46% to ₹1,266.07 crore in Q1FY23 against ₹344.55 crore in Q1 of last year and also climbed by 45.18% from ₹872.08 crore in Q4FY22.
In their Q1FY23 review report for hotels sector, Sumant Kumar and Meet Jain research analysts at Motilal Oswal highlighted that the company's ORR in 1QFY23 exceeded pre-pandemic level in almost all hotels, except for Ginger where ORR declined due to its strategy to increase room rent, while focus on cost optimization led to reduction in fixed cost as a percent of sales to 35% in 1QFY23 from 46% in 1QFY20.
Further, they explained that Palaces and Safaris not yet seen pre-Covid level traction, as foreign inbound travel has not picked up; it is expected to pick-up by end-CY23. Indian Hotels expects ₹1 billion + of enterprise revenue from Qmin in next two to three years. The company guided to open 14 more hotels and sign 15 more hotels in the rest of FY23.
Also, the Motilal analysts note pointed that Indian Hotels has 8,100 rooms in pipeline, representing 25%/40% of total portfolio/ operational portfolio. Its long-term guidance of 33% EBITDA margins with 35% margins from the new business and aspires to have a Qmin restaurant in every Ginger hotel.
Indian Hotels management expects 55%+ EBITDA margins in Ginger plus Qmin and other portfolios to clock a margin of 40-45%.
"Maintain BUY on IH with an FY24-based target price of ₹320," the analysts at Motilal added in the report.
Meanwhile, analysts at Ventura Securities in their report said, "We initiate coverage on IHCL with a BUY for a price target of ₹384 per share (FY25 PE of 46X), implying an upside of 37% from the CMP of ₹280 over the next 24 months."
Ventura's analysts note said, "Over the period of FY22-25E, we expect IHCL’s revenue/ EBITDA to grow at a CAGR of 27.1%/67.2% (low base effect) to ₹6,281.9 cr/ ₹1,890.9 cr, respectively. The net profit is expected to scale to ₹1,195.8 cr (compared to a loss of ₹265.4 cr), while EBITDA and net margins are expected to improve by 1690bps (to 30.1%) and 2410bps (to 19.0%), respectively. Return Ratios—ROE & ROIC—are set to improve by 1580bps (to 12.0%) and 1950bps (to 19.5%), respectively."
Indian Hotels is among the leading Indian hospitality companies and has a diverse business portfolio in hotels, resorts, jungle safaris, palaces, spas, and in-flight catering services.