The share price of Indian Hotels gained close to 4 percent in the morning trade on February 1 after the Tata-group hospitality firm reported an over four-fold year-on-year rise in consolidated net profit at Rs 383 crore for the quarter ended December 2022.
At 9.40 am,Indian Hotels was quoting at Rs 314.50 apiece, higher by 4.49 percent. Trading volumes at 5.6 million shares were 1.64 times the 20-day average of 3.4 million. The scrip is trading above its 200-day simple moving average of Rs 283.65.
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In the quarter, Indian Hotel’s revenue rose 24 percent from the year-ago period to Rs 1,744 crore. While occupancy fell from 73.3 percent in pre-COVID era to 72.1 percent, the average room rate jumped 25 percent to Rs 15,456.
IHCL managing director and chief executive officer Puneet Chhatwal said the company reported strong operational and financial performances across its businesses in the December quarter, resulting in an all-time high profit after tax.
"In this financial year alone, 30-plus hotels have been added to the pipeline and 14 hotels have opened, besides a strong growth in amã Stays & Trails with 108 homestays and Qmin with over 25 outlets," Chhatwal added.
FY24 expected to be good as well
The management expects FY24 domestic business to be healthy, driven by large events such as G20 and ICC ODI World Cup cricket. International locations are expected to perform better in the fourth quarter.
“The management indicated that in FY24, occupancy of international business will touch or even exceed the pre-pandemic level,” noted domestic brokerage Motilal Oswal Financial Services.
The firm has raised IHCL’s EBITDA estimates by 7 percent, 6 percent and 5 percent for FY23, FY24 and FY25, respectively. EBITDA stands for earnings before interest, taxes, depreciation and amortisation.
It has a "buy rating" on the stock with a target price of Rs 410 a share.
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Foreign brokerage Jefferies is also bullish on the stock. “Key domestic markets recorded >70 percent occupancy. Management expects demand to outpace supply for the next few years. Room pipeline at 35+ percent of operational capacity will help to capitalise on growth,” it noted.
It has a "Buy" rating with the target price of Rs 380 per share.
The hospitality sector will be following the Budget 2023 for closely. Any relief for the middle class or incentives for the tourism sector will be good for the hotel segment as well.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
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