ICICI Securities has upgraded Indian Hotels from ‘hold’ to ‘buy,’ predicting a 21% increase with a target price of ₹640 per share. This comes after the stock price dropped about 10% in the last three months.
Indian Hotels’ stock jumped 7.49% on Wednesday, closing at ₹570, up from ₹530.30 the previous day.
The brokerage firm expects the company to achieve an 18% EBITDA CAGR over FY24-27. They project a 14% revenue CAGR and anticipate that existing assets will contribute 8-10% annual EBITDA growth, with additional growth from new hotels. Most of these new rooms will come from asset-light management contracts.
The demand outlook for Indian Hotels looks strong. With current occupancy and room rates, RevPAR growth is expected to remain healthy into FY25. Industry forecasts suggest a double-digit demand CAGR over FY24-28, compared to a supply CAGR of 7-8%, which should drive ARR upward.
For the quarter ending March 31, 2024, Indian Hotels reported consolidated sales of ₹1,951.46 crore, down 17.95% from the same quarter the previous year. Despite this, the company saw a 27.26% year-on-year increase in net profit, reaching ₹417.76 crore for the latest quarter.
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