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Rakesh Jhunjhunwala's multibagger stock gains 175% in 2 years. Should you buy?

Indian Hotels is an 'A' Group stock on BSE, and trades under the index S&P BSE 200. (Bloomberg)Premium
Indian Hotels is an 'A' Group stock on BSE, and trades under the index S&P BSE 200. (Bloomberg)

  • As of March 31, 2022, Rakesh Jhunjhunwala's shareholding in Indian Hotels is to the tune of 1,57,29,200 equity shares, or 1.11%. He also holds 1,42,87,765 equity shares or 1.01% in the company through his wife Rekha Jhunjhunwala, as per the shareholding pattern.

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Rakesh Jhunjhunwala has one of the most successful tales of making valuable gains from stocks. His long-term strategy, making most of the bearish market, and diverse portfolio in the equities - have made him a billionaire. On Thursday, Jhunjhunwala's wealth in Tata Group-backed Indian Hotels stock jumped by nearly 25 crore in a single day. The stock featuring in the segment of hotels and resorts has potential for further upside due to its pursuit of strong growth plans ahead.

On BSE, Indian Hotels finished at 223.50 apiece up by 8.30 or 3.36%. At the closing price, its market cap stood at 31,745.93 crore.

On Wednesday, Indian Hotels shares stood at 215.20 apiece.

Indian Hotels is an 'A' Group stock on BSE, and trades under the index S&P BSE 200.

As of March 31, 2022, Rakesh Jhunjhunwala's shareholding in Indian Hotels is to the tune of 1,57,29,200 equity shares, or 1.11%. He also holds 1,42,87,765 equity shares or 1.01% in the company through his wife Rekha Jhunjhunwala, as per the shareholding pattern.

Both his and wife's portfolio is managed by Rakesh. Together, the couple has 3,00,16,965 equity shares or 2.12% in the company.

Compared to the previous day's closing price, Indian Hotels shares have risen by 8.30. With that, Jhunjhunwala made gains of about 24.914 crore (3,00,16,965 equity shares X 8.30) in the company in a single-day trading session.

As per Trendlyne data, Jhunjhunwala's overall holding in Indian Hotels values 670.9 crore as of today. Not just that, his wealth in the company is seventh most valued in his portfolio after Fortis Healthcare, Crisil, Tata Motors, Metro Brands, Star Health, and gems and jewelry giant Titan who up till this date accounts for the majority portion of his wealth.

In a year, Indian Hotels stock has climbed by a whopping 61.62% as of today. On June 23 last year, the stock was merely around 138.28 apiece on BSE.

The big bull began investment in the Indian Hotels shares in June 2020, as per the data. It was the time when the Coronavirus pandemic led to a nationwide lockdown and hampered hotel business activities severely. However, this also shows, that Jhunjhunwala has been optimistic about the company's shares.

In the past two years, Indian Hotels emerged as a multi-bagger as its gain has risen by a breathtaking 175.08%. The stock was around the 81.25 level on June 23, 2020, as per BSE data.

Should you buy Indian Hotels shares?

In its FY22 annual report, Indian Hotels said it plans to execute its “AHVAAN 2025" strategy which essentially focuses on four key pillars including 1) reaching a total of 300+ hotels across the portfolio, 2) clocking a consolidated EBITDA margin of 33% by FY26E with 35% EBITDA share from management contracts and new businesses, 3) achieving a 50:50 ratio between owned/leased and management contract room keys and 4) retaining a net cash balance sheet while pursuing its growth plans.

Adhidev Chattopadhyay, Research Analyst at ICICI Securities said, "The AHVAAN strategy is an extension of the company’s earlier “Aspiration 2022" strategy which focused on asset-light expansion and improvement in margins."

According to the analyst, the company's April and May 2022, revenue is 10% higher than pre-Covid levels and with sustained pickup in business travel along with leisure.

"We expect FY23E revenue and FY24E revenue at 104% and 122% of pre-Covid (FY20) levels, respectively. The company had achieved Q3FY22 consolidated EBITDA margin of 29% and we build-in an EBITDA margin of 32% in FY24E vs. company guidance of 33% by FY26E factoring in inflation impact," Chattopadhyay said.

Furthermore, the analyst said, "We reiterate our BUY rating with a revised SoTP-based target price of Rs284/share (earlier Rs292), valuing the stock on 22x Jun’24E EV/EBITDA. Key risks to our rating are fresh Covid waves impacting demand and rise in costs denting margins."

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