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Shares of South Asia’s largest hospitality chain enterprise opened flat in Monday’s trading session, even though a global brokerage firm UBS recommended a potential upside of 20 percent. 

At 12:10 p.m, Indian Hotels Company Ltd(IHCL) shares were trading at ₹598 per share, down 1.54 percent from the previous close price. The company has a market value of ₹85,128 crore. 

The Indian Hotels Company Ltd is primarily engaged in the business of owning, operating & managing hotels, palaces, and resorts. IHCL has a portfolio of 285 hotels including 85 under development globally across 4 continents, 12 countries, and in over 100 locations. 

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Among the 285 hotels, 105 are under the Taj brand, 92 operate under the Vivanta brand, and 88 are part of the Ginger brand. 

Over the past six months, the company’s share price has surged by 43%, and it has seen an impressive 80% increase over the last 12 months. 

The Indian Hotels Company Ltd recorded a 16% year-on-year growth in operating income, rising from ₹1,686 crore in Q3FY23 to ₹1,964 crore in Q3FY24. Similarly, the net profit saw an 18% uptick, climbing from ₹404 crore to ₹477 crore during the same period. 

For the latest fiscal year, the company achieved a net profit margin of 16.72% and an operating margin of 26.28%. 

UBS Brokerage has raised the target price on Indian Hotels Company Ltd with a target price of ₹715 per share from ₹500, representing an upside potential of up to 20% from Monday’s trading price of 598 per share. 

The rationale behind providing such a recommendation is that shares of Indian hotels offer significant potential for revenue and profitability growth, supported by their internal assets and robust cash generation, according to UBS. 

The brokerage highlighted that the company’s various growth options could lead to both earnings upgrades and an increase in the embedded value of these opportunities. UBS expects this to drive a re-rating of the stock from ₹ 500 to ₹ 715 per share.

Despite recent consensus earnings upgrades being priced in, the brokerage believes that the full impact of operating and financial leverage has yet to be fully reflected in the stock price. 

According to the december quarter shareholding pattern, the company promoters hold a 38.12 percent stake in the company, while Domestic Institutional Investors hold a 22.19 percent stake, and Foreign Institutional Investors hold a 23.28 percent stake in the company. 

Written by Omkar Chitnis

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