The shares of South Asia’s largest hospitality chain enterprise gained around 3 percent to Rs 422.60 per share after UBS gave an upside of 19 percent.
Indian Hotels Company Ltd(IHCL) shares closed at Rs 419.60 per share on Monday, up 2.04 percent from the previous close price of Rs 411.20. The company has a market value of Rs 59,642 crore.
The company’s share price has gained 13 percent in the last six months and 32 percent in the previous year.
Indian Hotels Company Ltd’s operating income increased by 16 percent yearly, from Rs 1,232 crore in Q1FY23 to Rs 1,433 crore in Q1FY24. During the same period, net profit also increased by 28 percent from Rs 124 crore to Rs 159 crore.
In the most recent fiscal year, the company reported a Net Profit Margin of 16.72 percent, while its operating margin at 26.28 percent.
UBS Brokerage has raised the target price on Indian Hotels Company Ltd with a target price of Rs 500 per share from Rs 410, representing an upside potential of up to 19% from Monday’s close price of Rs 419.60.
The rationale behind providing such a recommendation is
● The market appears sceptical about the company’s average room revenue (ARR) rate and occupancy growth.
● The company has 8 upcoming launches in key cities, which makes positive sentiment on the overall market supply-demand balance.
● The brokerage estimates the EBITDA to grow by 9 percent/18 percent ahead of consensus over FY 25-26.
● The brokerage expects the strong momentum to continue in FY24 driven by favourable demand-supply dynamics and big global events such as the ICC Cricket Men’s World Cup, an increase in ARR due to better demand, upgrades in hotels, and corporate rate hikes.
● Valuation-wise, the IHCL shares were trading at 53 times (x) price-to-earnings (PE) ratio, much lower than the sector’s average of 83x PE multiple.
According to the recent shareholding pattern, the company promoters hold a 38.19 percent stake in the company, while Domestic Institutional Investors hold a 23.28 percent stake, and Foreign Institutional Investors hold a 22.17 percent stake in the company.
The Indian Hotels Company Ltd is primarily engaged in the business of owning, operating & managing hotels, palaces, and resorts.IHCL has a portfolio of 263 hotels including 75 under development globally across 4 continents, 12 countries, and in over 100 locations.
Written by Omkar Chitnis
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