In its research report dated October 4, 2023, Sharekhan has expressed a bullish outlook on the Indian Hotels Company and recommended a buy rating on the stock with a target price of Rs 492.
The report highlights the eventful fiscal year 2024 (FY2024) for the Indian hotel industry, driven by factors such as the G-20 summit, which generated strong room demand even during a relatively weak Q2FY24. Moreover, the upcoming Cricket World Cup scheduled for October/November 2023 and the festive season are expected to boost room demand during a seasonally strong Q3FY24.
Looking ahead, the report emphasizes the growth potential of the Indian hotels industry, with foreign tourist arrivals (FTAs) recovering to 56% of pre-COVID levels and domestic tourism rebounding to 75% of pre-COVID levels. Additionally, a focus on higher Revenue per Available Room (RevPar) and an asset-light business model are expected to consistently drive profitability and cash flows for the Indian Hotels Company (IHCL), with a target of achieving FY25 EBIDTA margins of 33% in the coming years.
The report reaffirms a Buy rating on Indian Hotels Company with a revised price target (PT) of Rs 492. The stock is valued at 22x/19x/16x its FY24E/25E/26E EV/EBIDTA, indicating good earnings growth visibility and highlighting the long-term structural growth prospects of the hotel industry.
Investors are encouraged to consider this research report when evaluating the investment potential of the Indian Hotels Company, taking into account the positive industry outlook and IHCL’s strategic positioning within the market.
