2 Tata Group-Backed Stocks In Steel, Hotels Segment Attractive Bets For Fetching Returns; Do You Own Any?

Tata Group stocks are buzzing when markets are volatile. From auto, IT, steel to hotels and tourisms, Tata Group shares are shining currently. On February 5th, Tata Steel stock touched a new 52-week high, while the Indian Hotels stock neared its own high. These two stocks are attractive bets with potential to rise between 6-10% in the near term. There is 'HOLD' recommendation on Tata's steel stock, while buy rating on hotel stock.

For long term basis, these two stocks have robust potential.

Here's what brokerages said:

Tata Steel:

In its research note, Geojit said, "Growth in domestic operations was offset by weak demand for international operations. Factors such as robust domestic demand, rising spot prices in Europe, asset restructuring, and new operations in Europe are expected to support growth in the long term."

However, Geojit's note added, "we remain cautious due to the recent uptick in raw material costs, which could limit margin expansion in the near term. Further, the stock's valuation looks expensive at the current levels. Hence, we downgrade our rating to HOLD, with a rolled-forward target price of Rs. 151 based on SOTP valuation."

On BSE, Tata Steel shares ended at Rs 141.50 piece, up by 2.02% with market cap of Rs 1,75,229.94 crore. In the trading hours of February 5th, the stock price also closed a new 52-week high of Rs 143.30 apiece.

There is a potential upside of nearly 7% in Tata Steel in near term.

Tata Steel is a leader in the global steel industry with operations spanningover 26 countries with key operations in India, Netherlands and United Kingdom. Tata steel primarily caters to customers in automotive, construction, engineering, energy and power sectors.

Indian Hotels:

For Indian Hotels, JM Financial's latest report said, "Indian Hotels Company Limited (IHCL) reported a stellar 3QFY24 on a consolidated basis. Revenue increased 16% YoY to INR 14.3bn (1% miss on JMFe) while EBITDA (INR 7.3bn; +23% YoY) was a 1% beat on JMFe. EBITDA margin expanded to 37% (+187bps YoY) vs. our expectation of 36%. Multiple levers fuelled the resilient performance: i) a robust standalone business, ii) new assets (Ginger Mumbai asset already yielding profits), iii) its new business vertical (Ginger, Qmin, TajSATS and others) boasting 33% YoY revenue increase to INR 4.2bn in 3QFY24, and iv) management fee growing 13% YoY to INR 1.3bn during the quarter."

Further, the brokerage's note said, the Indian Hotels management remains optimistic on achieving double-digit revenue growth in FY25E (on a high base) led by i) a strong development pipeline and ii) growth in new brands and businesses.

On the valuation, JM's note said, "IHCL's unmatched pan-India coverage, comprehensive presence across all customer segments, vastly improved brand architecture and sharper focus on capital allocation is yielding results with a positive flow-through into earnings. We maintain a BUY rating and roll forward to a Mar'25 TP of INR 555; valuing it at 25.0x (previously 22.0x) Mar'26 consolidated EBITDA.

From current market price, the stock price has potential upside of over 9.1%

On Monday, Indian Hotels share price ended at Rs 508.60 apiece, up by 1.71% with market cap of Rs 72,395.76 crore on BSE.

IHCL and its subsidiaries bring together a group of brands and businesses that offer a fusion of warm Indian hospitality and world-class service. These include Taj - the iconic brand for the most discerning travellers and ranked as the World's Strongest Hotel Brand and India's Strongest Brand across sectors as per Brand Finance Hotels 50.

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.