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With a market valuation of Rs. 46,411.56 crore, Indian Hotels Company Ltd. is a large-cap company in the consumer discretionary goods and services (CDGS) industry. The TATA enterprise Indian Hotels Company Ltd. (IHCL) operates in the hotel and hospitality industry. The shares of Indian Hotels Company are among the multibagger stocks that the stock market has witnessed. Let's know how this Rakesh Jhunjhunwala portfolio stock has generated multibagger returns and whether should you buy the stock or not.
The shares of Indian Hotels Company ended Friday's trading session on the NSE at ₹326.50 per piece, down 2.20 per cent from the previous close of ₹333.85. Compared to the 20-Day average volume of 5,830,180 shares, the stock's total volume of trades on Friday was 5,791,275 shares. From ₹30.22 on January 1, 1999, to the stock price it is trading at now, a multibagger return and an all-time high of 980.41% have been recorded. The stock price climbed from ₹106.12 on September 29, 2017, to the current market price during the past five years, resulting in a multibagger return of 207.67% and an approximate CAGR of 25.19%.
In the last 1 year, the stock has gained 77.82% and on a YTD basis, the stock has gained 77.40% so far in 2022. On the NSE the stock had touched a 52-week-high of ₹337.20 on (16-September-2022) and a 52-week-low of ₹158.54 on (22-September-2021), indicating that at the current market price the stock is trading 3.17% below the high and 105.94% above the low. For the quarter ended June 2022, the company recorded a promoter shareholding of 38.19%, FIIs holding of 15.07% (down by 0.96% QoQ), DIIs holding of 29.56% (up by 1.05% QoQ), Government shareholding of 0.13% and public shareholding of 17.05% (down by 0.09% QoQ).
The research analysts of the brokerage firm Sharekhan has said on Friday that “The Indian hospitality industry is growing at over 20% versus pre-pandemic levels led by room demand for domestic leisure travel, a recovery in demand from the Meetings, Incentives, Conferences and Exhibitions (MICE) segment and business travel and high demand from weddings and events. Revival in the foreign tourist arrivals (FTAs) with easing of travel restrictions will further boost the room demand in H2FY2023 and will also help room rentals to remain high. Indian Hotels Company Ltd (IHCL) posted strong growth of 3.7x in revenues on y-o-y basis and EBIDTA margins improving to 30% in Q1FY2023. Domestic occupancy ratio stood at 68% in Q1FY2023. Despite Q2 being a lean quarter for business, occupancy ratio is expected to remain close to Q1 levels due to sturdy room demand in key domestic destinations."
They further said in their research note that “Room demand is expected to exceed room supply for the next 2-3 years which will help occupancies to remain high. The company has charted a strong growth plan to be achieved by FY2025-26 with strong improvement in cash flows and strengthening the balance sheet with focus on becoming debt free. Pent up demand in the domestic leisure travel along with recovery in inbound tourism will help in posting strong performance in the coming quarters. EBITDA margins will consistently improve in the coming years. Thus, we maintain IHCL as one of our top picks in the hospitality space. The stock trades at 27.9x/19.9x its FY2023E/24E EV/EBITDA. We maintain a Buy recommendation on the stock with a revised price target of Rs. 380 (rolling it over to September 2024 earnings). We are introducing FY2025 earning estimates through this note."
The target price set by the brokerage is reflecting a potential upside of 16% for the stock from its current market price. For the quarter ended June 2022, the late ace investor Rakesh Jhunjhunwala had hold 1,57,29,200 shares of the company or 1.11% stake and her wife Rekha Jhunjhunwala hold 1,42,87,765 shares or 1.01% stake in Indian Hotels.
The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.