2 Stocks To Buy As Suggested By Sharekhan As Covid Gradually Disappears

Sharekhan has suggested buying the stocks of Inox Leisure and Indian Hotels in its recent research reports. The brokerage sees good potential in both these stocks going ahead, largely on account of opening-up of the Indian economy and global economies, due to vaccination.

Buy Inox Leisure stock, says Sharekhan

Sharekhan says that it expects Inox Leisure's business to recover in H2FY2022 as quality content has lined-up for festive season and COVID-19 restrictions to ease across many states.

"Expect a larger portion of eligible population will be vaccinated by end of December 2021. We expect both footfalls and occupancy rate would be around 26 lakh and 12% in Q2FY2022 compared to 8 lakh and 12%, respectively, in Q1FY2022. We estimate net loss to be at Rs 71 crore in Q2FY2022 versus a net loss of Rs 122 crore in Q1. As new movies failed to excite OTT audiences during the pandemic, we believe most of movie producers will continue to depend on theatrical releases, which would drive occupancy rates of multiplexes going ahead," the brokerage has said.

Inox Leisure: Buy the stock with a price target of Rs 470

According to Sharekhan, Disney announced the discontinuation of the simultaneous theatrical and digital release of movies and there will be an exclusive theatrical window for 45 days. This indicates the relevance of theatrical releases and also reduces concerns around the potential structural threat from OTT.

"As most of new movies (including some big-starrer movies) fail to excite OTT audience, we believe most of movie producers will continue to depend on theatrical releases, which would help to increase the occupancy rate of multiplexes going ahead. We maintain a Buy on Inox Leisure with a a revised target price of Rs. 470, given meaningful recovery in 2HFY22, healthy pent-up demand and lower structural risk from the OTT segment," the brokerage has said.

Buy Indian Hotels, says Sharekhan

Another stock the brokerage is recommending is the stock of Indian Hotels. According to Sharekhan, the rapid vaccinations lifted domestic leisure travel, helping occupancies to scale up to close to 60% in July 2021 and further improve in August.

"International properties (in the UK and US) are recovering as these markets open up. Hotel occupancies in the US are above 60%, while London hotels occupancies are trending at 55-56%," the brokerage has said.

Indian Hotels: Price target of Rs 215 on the stock

Sharekhan has set a price target of Rs 215 on the stock of Indian Hotels. According to it, a strong recovery in domestic leisure travel would help Indian Hotels in posting better performance in the coming quarters.

"Further, a recovery in the business travel and permitting foreign tourist to travel in India would further give a boost to the occupancies in the quarters ahead. Strong focus on building an asset-light model and recovery in the business environment will help Indian Hotels to recover 80% of pre-COVID levels in FY2023 with strong growth in profitability. Further the company is focusing on strengthening its balance sheet. The stock trades at 29x/22x its FY2023E/24E EV/EBIDTA. We maintain a Buy recommendation on the stock with revised price target of Rs. 215," the brokerage has said.

Disclaimer

The investment ideas are picked from the brokerage report of Sharekhan. Investors should note that investing in stocks is risky and neither the author, nor Greynium nor the brokerage would be responsible for losses based on a decision from the above article.