Indian Hotels, the 122-year-old hotel company of Tata Group, is an attractive bet after its stock price turned ex-dividend earlier this week. The Taj Hotels owner is scheduled to dividend of 175% by late-June 2024 FY24. Currently, the stock is at Rs 584.90 apiece with a market cap of Rs 83,256.55 crore. YTD, the stock is up by 34% on BSE. Brokerages like ICICI Securities and Motilal Oswal have recommended BUY with the highest target price being Rs 680.
Indian Hotels Dividend:
The Taj Hotels franchisee owner announced a dividend of Rs 1.75 per share or 175% for FY24. The stock turned ex-dividend on June 7, 2024, and its payment date is fixed on Friday, June 21, 2024. This is the highest dividend payout by Indian Hotels. In 2023, the company paid dividends up to Rs 1 per share or 100%.
As per Trendlyne data, the company delivered up to 23 dividends since July 2001.
Among other corporate actions, Indian Hotels' stock has split once in its history. The stock face of Rs 10 each in Indian Hotels has been split to Re 1 each since October 27, 2006. The stock split ratio of 10:1.
Indian Hotels Earnings:
FY24 revenue is at Rs 6,952 crore, up by 17% YoY, while EBITDA is up by 20% YoY to Rs 2,340 crore. EBITDA margins expanded by 1 percentage point to 33.7%. FY24 PAT rose by 26% YoY to Rs 1,259 crore.
Looking ahead for FY25, Puneet Chhatwal, Managing Director & CEO, IHCL said, "IHCL will continue to deliver double-digit revenue growth with new businesses at 30%, and the opening of 25 hotels. IHCL will also introduce the re-imagined Gateway, a full-service hotel offering in the upscale segment, an ideal fit to capture growth opportunities in emerging micro markets in metros and Tier II and Tier III cities. The brand roll-out starting with 15 hotels will commence with launches in Bekal and Nashik this quarter followed by destinations like Bengaluru, Thane and Jaipur. The brand will scale to a 100 hotels portfolio by 2030."
Notably, IHCL has commenced a 5-year capital development plan from FY23 to FY27 to Rs 3,500crore towards key asset upgradation, building capabilities and select new projects.
BUY IHCL Share Price?
ICICI Securities on IHCL Shares:
We introduce FY27 estimates, building in FY24-27E revenue/EBITDA CAGRs of 14%/18% and 8-10% annual EBITDA growth from its existing assets, while the commencement of new hotels adds to this. With the stock price correcting ~10% in the last three months, we upgrade IHCL to BUY, from Hold, with a SoTP-based revised TP of INR640 (earlier INR617), rolling forward to 26x Jun'26E EV/EBITDA. Key risks: Demand slowdown and slower ARR growth.
Motilal Oswal On IHCL Shares:
Going forward, IH is likely to sustain double-digit consolidated revenue growth in FY25, with its new and reimagined business likely to grow at a much higher pace. TajSATS being an integral part of its new and reimagined business portfolio is likely to aid the growth momentum on the back of strong industry tailwinds.
We expect the strong momentum for IH to continue in FY25, led by: 1) an increase in ARR due to healthy demand, asset management strategy (upgrades in hotels), and corporate rate hikes; 2) sustaining higher occupancy levels led by favourable demand-supply dynamics; 3) a strong room addition pipeline until FY28 in both owned/leased (2,779 rooms) and management hotels (10,174); 4) higher income from management contracts; and 5) value unlocking by scaling up reimagined and new brands.
We reiterate our BUY rating with a SoTP-based TP of INR 680.
Disclaimer: The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.
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