scorecardresearchIndian Hotels Company rallied 75% in last 10 months; should you buy now?

Indian Hotels Company rallied 75% in last 10 months; should you buy now?

Updated: 03 Feb 2023, 11:48 AM IST
TL;DR.

The stock performed strongly in the last 10 months, rallying from its 52-week low of 180.75 a piece to the current value of 318, generating a solid return of 75.38%.

From its March 2020 low of  <span class='webrupee'>₹</span>75, the stock skyrocketed 365% to hit an all-time high of  <span class='webrupee'>₹</span>349 on October 20, 2022.

From its March 2020 low of 75, the stock skyrocketed 365% to hit an all-time high of 349 on October 20, 2022.

Shares of Indian Hotels Company, a Tata Group hospitality firm, snapped a three-day winning streak on Thursday and fell 2.66% to Rs. 318 apiece. The stock, which has been on a declining trend since the beginning of the year, gained 8.54% in Wednesday's trade, marking its highest intraday rise since October 2021, owing to the firm's record profits.

On February 01, the company posted a whopping 320% YoY increase in its consolidated net profit to 403.56 crore, representing the company's highest-ever quarterly net profit. It had posted a net profit of 130 crore in the preceding quarter and 181 crore in Q1FY23.

The company also recorded its highest-ever revenue during the quarter at 1,685.8 crore, a growth of 51.66% compared to 1,111.22 crore in a similar quarter of last year and 23% higher than Q3FY20, pre-Covid levels.

On a standalone level, the occupancy rate was 71% in Q3 FY23, while the average revenue rate (ARR) stood at Rs. 15,456 and the RevPAR came in at Rs. 11,137.

"In this financial year alone 30-plus hotels have been added to the pipeline and 14 hotels have opened, besides a strong growth in amã Stays & Trails with 108 homestays and Qmin with over 25 outlets," the MD & CEO Puneet Chhatwal said during the earnings call.

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Stock price chart of Indian Hotels Company.

The stock performed strongly in the last 10 months, rallying from its 52-week low 180.75 a piece to the current value of 318, generating a solid return of 75.38%. From its March 2020 low of 75, the stock skyrocketed 365% to hit an all-time high of 349 on October 20, 2022. 

Despite the strong performance, brokerages continue to be bullish on the stock due to the company's strong Q3 numbers. Motilal Oswal in its result update report maintained a "buy" call on the stock with a SoTP-based target price of Rs. 410 apiece, indicating an upside of 29%. 

Factoring in the 3QFY23 performance, the brokerage raised its FY23, FY24, and FY25 EBITDA estimates by 7%, 6%, and 5%, respectively, aided by robust demand due to the wedding season and an increase in inbound travel.

On similar lines, ICICI Securities has upgraded the stock to "buy" from the "add" rating with a revised SoTP-based target price of Rs. 399 per share from Rs. 366 apiece.

ICICI is optimistic about the company and expects the strong Q3 momentum to continue in FY24E earnings. "Heading into FY24, demand drivers such as the Government of India’s intent to leverage the G20 Summit as a launchpad to boost inbound tourism coupled with sports events such as the Men’s Cricket ODI World Cup in October-November 23 to be held in India may drive RevPAR growth for the sector and the company," said the brokerage.

Likewise, another brokerage firm, IDBI Capital, also upgraded the stock to "buy" with a revised target price of 371 apiece.

"We like IHCL in domestic hospitality space given its superior revenue growth outlook, cost optimization measures, increasing contribution of new initiatives in net sales as well as EBITDA and a healthy balance sheet," said the brokerage.

14 analysts polled by MintGenie on average have a 'strong buy' call on the stock.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.

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First Published: 03 Feb 2023, 11:48 AM IST