Rakesh Jhunjhunwala Portfolio: One sector hardest hit by Covid-19 was the hospitality industry. But as they say, hard times don’t last forever. Indian Hotels Company (IHCL), included in the portfolio of top investor Rakesh Jhunjhunwaala, has outperformed the Nifty50 benchmark so far this year. The Tata Group’s share is up 23 percent in 2022, while the benchmark index Nifty has dropped 8 percent over the same period.
Indian Hotels Company Ltd (IHCL), owned by the Tata group, is a pioneer of luxury hotels. In 1903, the group started the iconic hotel that is today called The Taj Mahal Palace. The group now has more than 215 hotels, villas and restaurants, offering medium-sized budget hotels to lavish multi-acre palaces. The company operates in 80 locations across four continents and 12 countries.
According to the recent stock pattern, Rakesh Jhunjhunwala owns 1.57 crore shares of IHCL and Rekha Jhunjhunwala has 1.42 crore shares. The couple therefore has a total interest of 2.21 percent in the company. Both have increased their stake in the company from January to March 2022.
It reported a profitable fourth quarter and a substantial decline in annual losses, while announcing results for the fourth quarter and fiscal year 2021-22. The chain reported revenue of Rs 872 crore in the fourth quarter as compared to Rs 615 crore in the corresponding period of the previous fiscal year.
It has reported a profit of Rs 72 crore compared to a loss of Rs 98 crore in the fourth quarter of fiscal year 2020-21. On an annual basis, it reported revenues of Rs 3,056 crore in fiscal 2021-22, up from Rs 1,575 crore in fiscal 2020-2021.
Should Investors Make Profits, Buy or Hold IHCL Shares?
Analysts at Motilal Oswal expect IHCL stock to rise 24 percent, as occupancy rates reach pre-covid levels and average room rent (ARR) rises in mid-2022. According to the brokerage note, revenues from new companies such as Ginger, Cumin, Ama and Chambers are also expected to increase.
According to Motilal Oswal, IHCL’s new business will fuel the growth of Tata Group’s hotel business. Management is focusing more on its new high-margin businesses, including Ginger and Cummins. Chambers and Ama.
Target given of Rs 278
As in FY22, analysts at Motilal Oswal say we expect a good recovery in FY23 and 24. Economic activity will return to normal. Occupancy rates have improved under the leadership of business travelers. The brokerage has given a buy rating target of Rs 278 for the stock, which is 20 percent higher than its current price.
Anuj Gupta, Vice President (Research) at IIFL Securities says it is the only correction or profit posting. The trend and cycle of the shares of Indian Hotels Company is positive, as can be seen further. The level of Rs 210-215 could be a good buying zone for new investors. An investor can buy shares of the company at these levels while maintaining a stop-loss of Rs 174. In the short term, the shares of the company can rise to the level of Rs 260-275. At the same time, if the company closes above Rs 275, the company’s shares could reach Rs 320. He says the immediate support of the hospitality industry shares is at the level of Rs 200-205. At the same time, the stock has strong support at the Rs 174 level.
Analysts at Anand Rathi said: “On the day of the capital market, IHCL Ahvaan announced 2025, under which it aims to build a cohort of 300 hotels (in FY22 it had 20,581 rooms in 175 operating hotels), an EBITDA margin of 33 percent (in FY22, ~13.2 percent) with a 35 percent share of new business EBITDA and management fees in FY26 (currently ~22 percent) We maintain our positive attitude toward the hotelier and expect these others driven by its dominance in the Indian hotel sector, superior brand equity and well-diversified portfolio across business segments and price ranges.We maintain our Buy on the stock with the new TP of Rs 260 (previously Rs 254, sum of the parts, valued at 22x consolidated FY24th EBITDA).”
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