Buy This Mid Cap Tata Stock For Target Price Of Rs 330: ICICI Direct

Stock Outlook, Returns & Other details

The Current Market Price (CMP) of IHCL on NSE is Rs 272.90 apiece. Today, the stock opened at Rs 272.40 apiece, the previous close was Rs 270.85 apiece. It's the 52-week low is Rs 129.17 apiece recorded on 23rd August 2021, and the 52-week high is Rs 277.15 apiece, recorded on 10th August 2022.

Stocks in the past 1 week moved up by 0.64% and 13.53% in the past 1 month, respectively. Over the last 1 year, it has given a positive return of 93.2%. While, over the last 3 it has jumped 96.51% and in the past 5 years, the shares witnessed a share jump of 121%. In long-term investment tenure, the stock has performed well.

The ROE is negative 3.50. TTM EPS is also negative Rs 1.74. The P/B ratio is 5.07. The dividend yield is 0.15% and the face value is Rs 1. It is a mid-cap hotel sector company having a market capitalization of Rs 38,840 crore.

Q1FY23 Results

IHCL's performance was far ahead of our estimates led by a sharp recovery in corporate demand.

• Revenue grew 45.2% QoQ to Rs 1,266.1 crore (vs. I-direct estimate: Rs 1040.6 crore). It was also up 24% vs. pre-Covid levels (i.e. Q1FY20).
• EBITDA margin expanded 1284 bps from pre-Covid levels to 29.8% (I-direct estimate: 23.8%). It improved 1162 bps on a sequential basis.
• Net profit was up 129% QoQ to Rs 170 crore on strong demand and better operating margins vs. loss of Rs 277 crore in the same period last year.

Key triggers for future price performance

• Opening doors fully for foreign tourists (FTAs) from March 2022 to provide further fillip to leisure and business hotel room demand from FY23 onwards.
• Under AHVAAN 2025, the company plans to have 300+ hotel room portfolio with zero net debt status. IHCL also aims to achieve 33%+ margins (35% for new businesses) through cost efficiencies.
• Expect revenue CAGR of 32.2% during FY22-24E. Business to recover fully to pre-Covid levels while EBITDA to surpass pre-Covid levels in FY23E; margins seen at over 24% in FY24E, which has the potential to further expand by ~100 bps thereafter.
• Improved cash flows, equity infusion and divestment of non-core assets to make the company net debt free in FY23E

Buy for a target price of Rs 330 apiece

What should investors do? Along with the improved outlook, the company is also focusing on driving more efficiencies through cost optimisation. "We remain positive on the company and retain our BUY rating. We value IHCL at Rs 330 i.e.23x FY24E EV/EBITDA," the brokerage has said.

About - The Indian Hotels Company Limited

Founded by Jamsetji Tata in 1868, the Tata group is a global enterprise, comprising over 100 independently operating companies. The group operates in more than six continents with a mission to improve the quality of life of the communities it serves globally. Through long-term stakeholder value creation based on 'Leadership with Trust', the Tata brand stands as a lasting promise behind its businesses, many of which are industry leaders. IHCL is honoured to be one of the first of those timeless and tireless initiatives.
With room inventory of 178 hotels with 20,826 rooms, Indian Hotels (IHCL) occupies a diversified position in the hotel industry through brands such as Taj, Vivanta, SeleQtions and Ginger. The company also has a selective presence in luxury segment in the US, UK, Africa, UAE and Maldives through owned/managed properties. The company enjoys strong support from its promoter Tata Sons and is also an important strategic business for the Tata Group.