Brokerage house Ventura has initiated coverage on Tata Group hospitality sector stock Indian Hotels with a buy tag. Indian Hotels was one of the 32 stocks in late Rakesh Jhunjhunwala’s portfolio, as per the June quarter shareholding of the company.
The brokerage feels with revenge travel in trend post Covid 19, overall hospitality sector is set to benefit, leading players like Indian Hotels Company Limited (IHCL) can be the biggest beneficiaries.
“The fortunes of the hospitality industry in India could not have been better poised given the revenge travel trend post Covid and supply-demand situation getting favourable. Indian Hotels Company Ltd. (IHCL), a leading player in India, is expected to be one of the biggest beneficiaries of this,” said Ventura while initiating coverage on the Tata Group counter.
It is of the view that IHCL’s new strategy ‘AVHAAN 2025’ will play crucial role in its growth. Under the ‘AVHAAN 2025’, Indian Hotels aims to expand its portfolio of hotels to approximately 300 hotels across brands, taking its room inventory to 28100+
The brokerage was also bullish on IHCL’s aim to achieve 35% of the EBITDA share from management contracts and new brands and deleverage its balance sheet to be debt free by 2025.
Based on these, Ventura initiated a coverage on India Hotels with a target price of Rs 384 per share in a period of 24 months. It translates into an upside of 43% on Monday’s closing price of Rs 267.30 a share on the BSE.
Large-scale infrastructure push by the government in the budget, revival of domestic and international tourism, resumption of international flights, improving leisure and wedding demand are strong drivers are major catalysts for Indian Hotels.
Investment Triggers, as per Ventura, are expected ARR growth at 6% FY22-25 CAGR and likely occupancies’ increase by 1800bps supported by ‘AHVAAN 2025’, realignment of cost structures, conscious shift towards asset-light expansion and diversification pan-India and globally, catering to all price points.