Rakesh Jhunjhunwala Portfolio: One sector that was worst hit by Covid-19 was the hospitality sector. But as they say, tough times don’t last forever. Indian Hotels Company (IHCL), included in ace investor Rakesh Jhunjhunwaala’s portfolio, has outperformed the Nifty50 benchmark this year so far. The Tata Group company’s stock has climbed 23 per cent in 2022, while the benchmark index Nifty has registered a fall of 8 per cent during the same period.
Indian Hotels Company Ltd (IHCL), owned by the Tata group, is a pioneer in 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 mid-size budget hotels to opulent 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. Thus the couple has a total stake of 2.21 per cent in the company. Both have increased their stake in the company from January-March 2022.
The has reported a profitable quarter four and a substantial decline in yearly losses while announcing results for Q4 and financial year 2021-22. The chain reported revenue from operations of Rs 872 crore in Q4 compared to Rs 615 crore in the corresponding period of the previous fiscal.
It has reported a profit of Rs 72 crore compared to a loss of Rs 98 crore in quarter four of the fiscal year 2020-21. On an annual basis, it reported revenues of Rs 3056 crore in fiscal 2021-22, up from Rs 1575 crore in fiscal 2020-2021.
Should Investors Book Profit, Buy, or Hold IHCL Shares?
Analysts at Motilal Oswal expect the IHCL stock to rally 24 per cent, given the occupancy reaching pre-covid levels and average room rent (ARR) rising by mid-2022. According to the brokerage note, revenue from new businesses like Ginger, Cumin, Ama, and Chambers is also expected to see a rise.
According to Motilal Oswal, the new business of IHCL will boost the growth of Tata Group’s hotel company. Management is focusing more on its high-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 travellers. The brokerage has given a buy rating target of Rs 278 for the stock, which is 20 per cent higher than the current price.
Anuj Gupta, Vice President (Research) at IIFL Securities says that it is the only correction or profit booking. The trend and cycle of the shares of Indian Hotels Company is positive, it can be seen further. The Rs 210-215 level can 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 company’s shares can go up to the level of Rs 260-275. At the same time, if the company closes above Rs 275, the shares of the company can go up to Rs 320. He says that the hospitality stock’s immediate support is at Rs 200-205 level. At the same time, the stock has strong support at the level of Rs 174.
Analysts at Anand Rathi said: “At its capital market day, IHCL announced Ahvaan 2025, under which it aims to build a cohort of 300 hotels (in FY22, it had 20,581 rooms at 175 operational hotels), clock 33 per cent EBITDA margins (in FY22, ~13.2 per cent) with a 35 per cent share of EBITDA from new businesses and management fees by FY26 (currently ~22 per cent). We maintain our positive stance on the hotelier and expect it to outclass others, driven by its dominance in the Indian hotels sector, superlative brand equity and well-diversified portfolio across business segments and price-points. We retain our Buy on the stock with the new TP of Rs 260 (earlier Rs 254, on a sum-of-parts basis, valuing it at 22x consolidated FY24e EBITDA).”
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