Rakesh Jhunjhunwala Portfolio: One sector that was most affected by Kovid-19 was the hospitality sector. But as they say, hard times don’t last forever. Indian Hotels Company (IHCL), part of ace investor Rakesh Jhunjhunwala’s portfolio, has outperformed the Nifty 50 benchmark so far this year. The share of the Tata group company has climbed 23 percent in 2022, while the benchmark index nifty A decline of 8 per cent has been registered during the same period.
Tata Group-owned Indian Hotels Company Limited (IHCL) is a leader in luxury hotels. In 1903, the group started the iconic hotel which is today called the Taj Mahal Palace. The group now owns more than 215 hotels, villas and restaurants, offering everything from mid-sized budget hotels to lavish multi-acre palaces. The company operates in 80 locations spread across four continents and 12 countries.
As per the recent shareholding pattern, Rakesh Jhunjhunwala holds 1.57 crore shares of IHCL, and Rekha Jhunjhunwala holds 1.42 crore shares. In this way, this couple has a total stake of 2.21 percent in the company. Both have increased their stake in the company from January-March 2022.
While announcing the results for the fourth quarter and the financial year 2021-22, the company has reported a substantial decline in the profits and annual losses in the fourth quarter. The chain reported revenue of Rs 872 crore in Q4 as compared to Rs 615 crore in the corresponding period of last fiscal.
It has reported a profit of Rs 72 crore as compared to a loss of Rs 98 crore in the fourth quarter of FY 2020-21. On an annual basis, it recorded a revenue of Rs 3056 crore in FY 2021-22 as against Rs 1575 crore in FY 2020-2021.
Should investors book, buy or hold profits in IHCL shares?
Analysts at Motilal Oswal expect IHCL stock to rise 24 per cent, considering it reaches pre-Covid levels and average room rent (ARR) rises by mid-2022. According to the brokerage note, new businesses like Ginger, Cumin, Ama and Chambers are also expected to see a rise in revenue.
According to Motilal Oswal, the new business of IHCL will boost the growth of the Tata group hotel company. Management is focusing more on its higher-margin new businesses, which include Ginger, Cummins. Chambers and Ama.
Target given of Rs 278
According to analysts at Motilal Oswal, like in FY22, we expect good recovery in FY23 and 24. Economic activities are returning to normal. Occupancy has improved led by business travelers. The brokerage has given a buy rating target of Rs 278 for the stock, which is 20 per cent higher than the current price.
This is the only correction or profit booking, says Anuj Gupta, Vice President (Research), IIFL Securities. The trend and cycle of shares of Indian Hotels Company is positive, it can be seen going forward. The Rs 210-215 level could be a good buying area for new investors. An investor can buy the shares of the company at these levels by maintaining a stop loss of Rs 174. In the short term, the company’s shares can go up to the level of Rs 260-275. At the same time, if the company closes above Rs 275, then the shares of the company can go up to Rs 320. He says immediate support for the hospitality stock is at Rs 200-205 levels. At the same time, the stock has got strong support at the level of Rs 174.
Analysts at Anand Rathi said: “On its capital markets day, IHCL announced Ahwaan 2025, under which it aims to build a cluster of 300 hotels (in FY22, it had 20,581 rooms in 175 operational hotels), watch 33 per cent EBITDA margin (in FY22, ~13.2 per cent) from new businesses account for 35 per cent of EBITDA and management fees till FY26 (currently ~22 per cent). We maintain our positive stance on Hoteliers and expect it to outperform others driven by our dominance in the Indian hotel sector, excellent brand equity and a well-diversified portfolio across business segments and price-points. We continue to hold our buy on the stock with a new TP of Rs 260 (based on the sum of Rs 254 earlier, valuing it at 22x Consolidated FY24e EBITDA).
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