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The hospitality sector has been regaining upward momentum after couple of months breather. Within hospitality space, Indian Hotel has remained clear outlier as it resolved out of decade long consolidation on the back of strong volumes, indicating structural turnaround that augurs well for multi year up trend ahead, said ICICI Securities.

“Currently, stock is sustaining above 50 days EMA which has offered incremental buying opportunity on several occasions, since June 2020. Hence, it offers fresh entry opportunity with favourable risk reward as we believe unlocking of the economy would also support our technical rational," the brokerage and research firm said in a note.

ICICI Securities' Buy recommendation on Indian Hotels shares comes with a target price of 264 per share and stop loss of 192 with the time horizon of three months as it believes the ongoing crisis to restrict overall room supply in the industry for next 3-4 years which would augur well for branded players like Indian Hotels.

With room inventory of 19,425 rooms, Indian Hotels occupies diversified position in the hotel industry through brands such as Taj, Vivanta, SeleQtions and Ginger brands. 

With an object of becoming debt free, the board has approved of 4,000 crore of fund raising. Apart from improved cash flows and equity infusion, divestment of non-core assets to also help the company become debt free, as per the brokerage.

“Indian Hotels witnessed sharp rebound in Q2FY22; Revenue reaches to 72% of pre-covid levels. Domestic segment recovered to 86% of pre-covid revenues while international portfolio reached to 62% of pre-covid levels. We expect business to recover to 97% of pre-covid levels," the note highlighted.

As per BSE shareholding pattern, Rakesh Jhunjhunwala and his wife Rekha Jhunjhunwala hold 1.05% stake each in the Tata group company as of September 2021.

The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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