Indian Hotels shares up 4 percent, highest in 15 Weeks

Indian Hotels share price rose 4 percent on May 16, up most in the last 15 weeks and was the best performer among its peers. Trading volume was 3.49 million shares, 98 percent above 20-day average of 1.76 million shares.

The company recently reported a 343 per cent rise in consolidated net profit to Rs 328.27 crore for the March 2023 quarter compared to Rs 74.2 crore in the corresponding quarter last fiscal. Revenue from operations increased by 86.4 per cent to Rs 1,625.4 crore against Rs 872.1 crore in the year ago period. The company recorded highest ever full year consolidated revenue and EBITDA margin with PAT of over Rs 1,000 crore for the first time.

The company expects the RevPAR (revenue per available room) to grow in double digits for the new financial year, which stood at Rs 7,750 per night in FY22-23, up 38 percent from the pre-pandemic levels of Rs 5,600 per night. It also maintains its margin guidance for financial year 2025 at 33 percent.

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Foreign Brokerage firm Jefferies has a ‘Buy call on the company at a target price (TP) of Rs 425.

“The company’s RevPAR premium as compared to the industry was around 40 percent in FY19, which moved up to about 70 percent led by premiumisation of the portfolio, strong brand equity, quality market share gains and smart renovations,” it said

Domestic brokerage firm Motilal Oswal also has a ‘buy’ rating on the company at a TP of Rs 420 and believes multiple revenue growth drivers are in place for the luxury and leisure hotel operator such as strong domestic consumption story, favourable demand-supply dynamics, and rapid increase in hotels through asset-light model.

“Margins are likely to sustain at current levels (33%) due to higher contributions from margin-accretive businesses, improved productivity and operating leverage in existing hotels,” it added.

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Analysts currently have 15 buy, four hold, and one sell recommendations on the stock at an average TP of Rs 401.81, as per Bloomberg data.

The market cap of the company has increased 62 percent in the last one year and over 17 percent in the last six months. At 11.43 a.m., the scrip was trading 3 percent higher on the NSE at Rs 364 with benchmark Nifty trading 0.21 percent down at 18,360.30 points.

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