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Buy This Multibagger Tata Group Stock For 19% Upside: ICICI Securities
Indian markets are trading with gains with Nifty holding just above 17100 points. Meanwhile as the earnings are being announced, ICICI Securities has placed its 'Buy' call on the stock of Indian Hotels.
Here below are given all the relevant details:
About Indian Hotels:
Incorporated by the Tata Group founder, the company operates in the hospitality space. The company's some of the brands and businesses include Taj, SeleQtions, Vivanta, and Ginger.IHCL has a portfolio of 196 hotels including 40 under development globally across 4 continents, 12 countries and in over 80 locations.The Indian Hotels Company Limited (IHCL) is South Asia's largest hospitality company by market capitalization. It is primarily listed on the BSE and NSE.
Target price given on Indian Hotels Company by ICICI Securities:
The company has given a 'Buy' on the stock for a target price of Rs. 292 per share. At the current pricing of Rs. 244.45, this would imply return of over 19%.
Valuation:
"While Q4FY22 was an Omicron impacted quarter leading to 22% QoQ decline in IHCL's consolidated revenue, we reiterate our BUY rating with a revised SoTP-based target price of Rs292/share (earlier Rs285), valuing the stock on 22x Mar'24E EV/EBITDA", notes the brokerage in its report.
Rationale for a 'Buy' on Indian Hotels Company
Though this last quarter of Fy22 also had some Covid impact, there are expectations that from H1Fy23 there shall be recovery in the hotel business cycle. Also, the company is well capitalising on its brand equity and putting focus on new business segments, playing its part in cost optimisation, asset-light management contract model to
expand room portfolio, and net cash balance sheet post Rs40bn of equity fund raise through a rights and QIP issue in H2FY22.
Deleveraging seem to pay off:
The company's debt amid the Covid led downturn has increased to Rs. 35.7 billion in September 2021 but company's fund raise by way of rights issue in December 2021 that followed up with another fund raise in March 22 helped the company to become a marginall net cash company by March 22. "Going forward, the company may generate annual FCFF (post capex/pre-interest) of Rs8-9bn annually which can be utilised to tap growth opportunities or serve as a buffer to weather any fresh Covid induced disruptions in the near term", claims the report.
Disclaimer:
The above stock is taken from the ICICI Securities report and should not be considered as an investment advice. Markets are highly volatile and before betting on any market linked instruments investors should do their thorough analysis.
