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Large-Cap Tata Stock That Can Give High Return, Aims 25% Revenue, Project Expansions In Pipeline

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Reputed firm Anand Rathi has suggested investors to buy the stocks of Indian Hotels, with a target price of Rs. 260. Indian Hotels, a Tata group enterprise intends to focus on and expand its brands and business, started in the last 2-2.5 years, and aims at a further 25% revenue, and 35% EBITDA contribution from these businesses by FY26 from respectively 10% and 22% now.

 

Indian Hotels: Target Price, And Current Market Price

Indian Hotels: Target Price, And Current Market Price

The Current Market Price (CMP) of Indian Hotels is Rs. 222. Emkay Global has estimated a Target Price for the stock at Rs. 260. Stock is anticipated to give a 17.11% return, in 1 year. The company is a large-cap company with a market capitalization of Rs. 31,966 crore.

Stock Outlook 
Current Market Price (CMP)Rs. 222
Target PriceRs. 260
Potential 1 year return17.11%
52 week high share priceRs. 268.95
52 week low share priceRs. 121.21



According to the report, in December, 2021, the company raised Rs. 20bn through a rights issue and another Rs. 20bn through a QIP in March, 2022. However, after this, it has turned net cash, from net debt of Rs. 31bn in FY21.

According to the company profile, they have ticked a Profit After Tax of Rs. 354 crore, and its Consolidated EBITDA margin stood at Rs. 4,596 crore, with a 24% EBITDA margin.

Benefits and risks of the stock: Anand Rathi
 

Benefits and risks of the stock: Anand Rathi

Mentioning the stock's potential, Anand Rathi said, "At its capital market day, IHCL announced Ahvaan 2025, under which it aims to build a cohort of 300 hotels (in FY22, it had 20,581 rooms at 175 operational hotels), clock 33% EBITDA margins with a 35% share of EBITDA from new businesses and management fees by FY26. By FY22, the hotel company owned or managed ~20,581 rooms. Management contracts have increased from ~25% of rooms in FY18 to 36% in FY22, and the company intends to take this figure to 50% in the next few years. On the management-contract side, the company has 5,550 rooms in the pipeline, which should be operational in the next 3-5 years. Management expects Rs. 4bn revenue from management fees by FY26, with a 70% flow through to EBITDA. We maintain our positive stance on the hotelier and expect it to outclass others, driven by its dominance in the Indian hotels sector, superlative brand equity and well-diversified portfolio across business segments and price-points."

However, about the key risk, the brokerage firm has mentioned a slowdown in the economy which could curtail the demands.

About the company: IHCL

About the company: IHCL

The Indian Hotels Company Limited is South Asia's largest hospitality-focussed enterprise with Indian origins, relentlessly redefining opportunities in the best interest of all its stakeholders. It is a Tata group enterprise. With businesses ranging from iconic luxury to upscale and budget stopovers as well as in-flight catering; IHCL's pioneering leadership is backed by a rich 115-year legacy. IHCL's emerging initiatives in urban leisure, service retail, and concept travel. IHCL has vivid brands like Taj, SeleQtions, Vivanta, The Gateway, Ginger, Expressions, and TajSATS.

They are present in above 100 locations on 4 continents. They have unique F&B concepts, with more than 400 Restaurants and Bars. In India, they have 175 Hotels, in above 80 locations, in FY22.

Disclaimer

Disclaimer

The above stock was picked from the brokerage report of Anand Rathi. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.

Story first published: Saturday, May 28, 2022, 15:18 [IST]
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