Indian Hotels share price slumps over 4% after Q4 results; should you buy, sell or hold the stock?

Indian Hotels share price slumped over 4% on Thursday's session after the hospitality chain reported its March quarter results (Q4FY24). The company said on Wednesday that its consolidated profit after tax rose by 29.36% to ₹438.33 crore for the fourth quarter that concluded in March 2024. In the same quarter last year, the hotel firm reported PAT of ₹338.84 crore.

According to a regulatory filing, its total income increased to ₹1,951.46 crore during the quarter under review from ₹1,654.54 crore during the same period the previous year.

However compared to a year earlier, its total expenses rose to ₹1,416.77 crore from ₹1,254.52 crore.

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Indian Hotels share price today opened at ₹590 apiece on NSE, the stock touched an intraday low of ₹582.50 and an intraday high of ₹599.70 apiece. Rajesh Bhosale, Equity Technical and Derivative Analyst at Angel One, said that Indian Hotels share prices have seen a gap down opening, and we are seeing follow-up selling. Immediate support is at ₹580, which would be very crucial as a break below it could trigger further selloffs likely towards ₹560.

The hotel firm reported an in-line Q4FY24 with standalone RevPar increase of 15% (LFL adjusted for Ginger Mumbai effect), said domestic brokerage Nuvama Institutional Equities. Overall, the performance of the subsidiaries, especially Ginger (Roots Corp.), is strong and consistent. US activities are still not strong. Indian Hotels presented bold capital expenditure plans of ₹2,500 crore for the fiscal years FY25–27E.

The firm has maintained its "hold" rating on the stock and increased its target price from ₹476 to ₹578.

"At our target price, Indian Hotels valuation works out to 26x FY26E EBITDA compared to its pre-covid average of 20x. Q1FY25 could be volatile due to potential impact from elections," said the brokerage.

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According to Brokerage Antique Stock Broking, its expectations were met with consolidated revenue for 4QFY24 of ₹1,910 crore, up 17% YoY. For the first time since the recovery, single-digit ARR growth has been noticed, and both RevPar and ARR fell short of projections for the previous twelve quarters.

The brokerage highlighted that the management anticipates double-digit revenue growth in FY25, led by measures related to asset management, new business ventures, and portfolio expansion with the launch of 25 hotels. The business predicts a protracted upswing in the hotel sector, propelled by rising demand and constrained supply expansion. Expected growth for new brands and reinvented companies is about +30% YoY. The firm intends to expedite the development of new hotel brands in developing micromarkets in metro areas and Tier 2 and Tier 3 cities.

“We maintain HOLD rating, given the current valuation, and maintain the target price at ₹500 as the results were in line with our estimates. We continue to value Indian Hotels at 24x EV/EBITDA on FY26E EBITDA,” the brokerage said. 

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Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.