Buy Indian Hotel; target of Rs 180: Motilal Oswal
Motilal Oswal is bullish on Indian Hotel recommended buy rating on the stock with a target price of Rs 180 in its research report dated July 07, 2021.
July 08, 2021 / 03:50 PM IST
Motilal Oswal's research report on Indian Hotel
In FY18, management contract Hotels formed 32% of the overall portfolio, which has now increased to 46% (including Hotels in the pipeline). IH targets to take it to 50% going forward. About 78% of current pipeline Hotels are under management contracts. As per ‘Aspiration CY22’ announced in CY18, it looked to sign 15 Hotels under management contract annually. However, it added 22/29/17 Hotels in FY19/FY20/FY21. IH recorded the highest number of new Hotel signings and openings in the industry during CY20, with 17 signings and seven new Hotel openings. It generated a revenue of INR2.2b from management contracts, which it intends to take to INR3.5b. It is to be noted that EBITDA flow through in management contract income is 70-80% and that too without deploying capital, thus the said initiative is RoCE accretive.
We value the stock at 19x Jun’23E EV/EBITDA and arrive at a SoTP-based TP of INR180. We maintain our Buy rating.
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