BackICICI Securities gives 'buy' tag to this multibagger Rakesh Jhunjhunwala stock
Rakesh Jhunjhunwala portfolio: Post-Q4FY22 results of Indian Hotels Company Limited, the ICICI Securities has revised its Indian Hotel share price target to ₹292 levels
PremiumRakesh Jhunjhunwala portfolio: Despite hospitality industry reeling under the Covid-19 pandemic heat for last two years, Indian Hotel share has delivered multibagger return in last one year. In last one year, it has shot up to the tune of 125 per cent whereas in 2022, this Rakesh Jhunjhunwala stock has surged to the tune of 35 per cent. However, ICICI Securities sees more upside in this multibagger stock. According to ICICI Securities research report post-Q4FY22 results of Indian Hotels Company Limited, the brokerage has revised Indian Hotel share price target to ₹292 levels.
Highlighting the reason for raising target of this Rakesh Jhunjhunwala portfolio stock, ICICI Securities report says, "We raise our FY23/24E revenue estimates by 6/2% respectively and EBITDA estimates by 3/4% factoring in a stronger-than-expected demand recovery in H1FY23E (Apr’22 onwards) to pre-Covid levels with FY23E consolidated revenue expected to grow 56% YoY to Rs47.8bn or 107% of FY20 levels. We expect FY24E revenue to grow 18% YoY to Rs56.5bn with an assumption of occupancies at 72% vs. 68% in FY19 and ARRs growing 7% above FY20 (pre-Covid levels) and contribution from new businesses driving revenue growth. The company’s efforts to bring down fixed costs and staff-to-room ratio are expected to result in EBITDA margins improving to 28% in FY23E and 32% in FY24E vs. 22% in FY20."
Expecting recovery in FY23 in post-pandemic phase, the brokerage says, "We believe IHCL is well poised to benefit from the expected recovery in the hotel business cycle from H1FY23 (Apr’22) and are enthused by the company’s efforts to leverage its existing brand equity to focus on new business segments, focus on 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. Key risks to our rating are fresh Covid waves globally and in India impacting demand and rise in costs denting margins."
On its suggestion to Indian Hotel shares, ICICI Securities says, "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."
Rakesh Jhunjhunwala shareholding in Indian Hotels Company
Big Bull and his wife Rekha Jhunjhunwala have investments in this
Tata group hotel. As per the shareholding pattern of IHCL for Q4FY22, Rakesh Jhunjhunwala holds 1,57,29,200 IHCL shares or 1.11 per cent stake in the company whereas his wife Rekha Jhunjhunwala holds 1,42,87,765 IHCL shares or 1.01 per cent stake in the company.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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