Buy This Multibagger Mid Cap Tata Group Stock For 40% Gains, Gave 146.84% Returns In 5 Years

Ventura Securities is bullish on Indian Hotels Company Limited, a mid-cap Tata Group Company. The brokerage suggests buy the stock of the company for the estimated target price of Rs 384 apiece. The brokerage claims potential gains of 40% in 24 months if the stocks are purchased at the current market price. Indian Hotels Company's market capitalization is Rs 38,897.64 crore.

The fortunes of the hospitality industry in India could not have been better poised given the revenge travel trend post-Covid and supply-demand situation getting favourable. Indian Hotels Company Ltd. (IHCL), a leading player in India, is expected to be one of the biggest beneficiaries of this.

Stock Outlook

The current market price (CMP) of Indian Hotels Company Limited is Rs 273.30 apiece, trading 0.02% up. It was opened at Rs 273.20. Currently, the stock is Rs 144.13 above the 52-week low and Rs 7.86 below the 52-week high level, respectively.

Last year, on 23 August, the stock hit the 52-week low level at Rs 129.17 apiece, whereas, this month, August 18, 2022, it touched the 52-week high level at Rs 281.15 apiece.

Returns on Investment

In the past 1 week, the share price of the company slid down 0.55%, whereas, in the past 1 month, it has gained 8.35%. In the past 3 months, stocks gained around 21.4%. In 1 and 3 years it gained around 96.1% and 101.36%, respectively. In the past 5 years, the stocks gave a multibagger returns of 146.84%.

AVHAAN 2025

With a new strategy 'AVHAAN 2025', IHCL plans to

i) expand its portfolio of hotels to ῀300 hotels across brands taking its room inventory to 28100+

ii) target consolidated EBITDA Margins of ~33% by FY26 through a combination of better occupancies, rising ARRs coupled with cost control measures. IHCL aspires to achieve 35% of the EBITDA share from management contracts and new brands.

iii) deleverage its balance sheet to be debt free by 2025.

Buy for a target price of Rs 384

Commenting on the stocks, the brokerage said, "We initiate coverage on IHCL with a BUY for a price target of INR 384 per share (FY25 PE of 46X), implying an upside of 37% from the CMP of INR 280 over the next 24 months."

The brokerage added, "Over the period of FY22-25E, we expect IHCL's revenue/ EBITDA to grow at a CAGR of 27.1%/67.2% (low base effect) to INR 6,281.9 cr/ INR 1,890.9 cr, respectively. The net profit is expected to scale to INR 1,195.8 cr (compared to a loss of INR 265.4 cr), while EBITDA and net margins are expected to improve by 1690bps (to 30.1%) and 2410bps (to 19.0%), respectively. Return Ratios-ROE & ROIC-are set to improve by 1580bps (to 12.0%) and 1950bps (to 19.5%), respectively"

Risks

Risk to brokerage's estimates:

1) Resurgence of the pandemic which could impact global travel.

2) Delays in commissioning the pipeline inventory.

3) Failure in scaling up new business.

About - 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.
IHCL is reimagining itself by leveraging its strong brand equity to multiply its portfolio while aligning with high-growth segments. This includes manoeuvering excellence while reinvigorating its portfolio across all brands.

Disclaimer

The stock has been picked from the brokerage report of Ventura Securities. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decision.