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Indian Hotels shares zoom 100% in a year, what's fuelling the rally?

Indian Hotels shares zoom 100% in a year, what's fuelling the rally?

Indian Hotels share price today: Indian Hotels stock, which closed at Rs 142.54 on September 1 last year hit a record high of Rs 298.70 in today's session, translating into gains of 209 per cent during the period.

Late investor Rakesh Jhunjhunwala and his wife Rekha Jhunjhunwala held 3 crore shares or 2.12 per cent stake in the firm in last quarter. Late investor Rakesh Jhunjhunwala and his wife Rekha Jhunjhunwala held 3 crore shares or 2.12 per cent stake in the firm in last quarter.

Shares of Indian Hotels have doubled during the last one year on the back of good earnings show and aggressive expansion plans. The stock, which closed at Rs 142.54 on September 1 last year hit a record high of Rs 298.70 in today's session, translating into gains of 209 per cent during the period. Late investor Rakesh Jhunjhunwala and his wife Rekha Jhunjhunwala held 3 crore shares or 2.12 per cent stake in Indian Hotels in the last quarter. While Jhunjhunwala owned 1.11 per cent or 1.57 crore shares, his wife Rekha held 1.01 percent or 1.42 crore shares in the June quarter.

In today's session, Indian Hotels shares gained 1.32 per cent per cent to hit a record high of Rs 298.70 against the previous close of Rs 298.40. Indian Hotels stock is trading higher than the 5-day, 20-day, 50-day, 100-day and 200-day moving averages. The stock has risen 64 percent in 2022.

Total 3.52 lakh shares of the firm changed hands amounting to a turnover of Rs 10.44 crore on BSE. Market cap of the firm rose to Rs 42,192 crore on BSE. The stock hit a 52-week low of Rs 138.08 on September 7, 2021.

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The latest spike in the shares of Indian Hotels comes after credit ratings firm ICRA upgraded the long-term credit rating of the non-convertible Debentures (NCDs). The ratings for NCDs worth Rs 300 crore have been revised to AA plus against the earlier AA rating. ICRA also assigned a fresh rating of AA plus (Stable) for a bank overdraft facility/WCDL of Rs 15 crore.  

Citing the reasons behind the upgrade, ICRA said the upgrade in the rating factors is based on the improvement in the capitalisation metrics and cash flow position of The Indian Hotels Company Limited (IHCL/the company), following fund raising in FY2022, and significant improvement in operating metrics in Q1 FY2023.

IHCL raised equity of Rs 3,982.0 crore in FY2022 via rights issue and qualified institutional placement (QIP), the proceeds of which were primarily utilised for debt reduction.

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Stellar Financial Show

In the first quarter of current fiscal, Indian Hotels reported a consolidated profit after tax (PAT) of Rs 170 crore, due to surge in demand as the occupancy and rates exceeded pre-COVID levels.

The hospitality group logged a loss of Rs 277 crore during the corresponding period of the previous financial year. Revenue surged 249.45 per cent to Rs 1,293 crore in Q1, compared to Rs 370 crore in the year-ago period.

IHCL Managing Director and CEO Puneet Chhatwal said,"We have reported its best first quarter in the company's history. This performance has been boosted by a surge in demand across markets and segments, with occupancy and rates exceeding pre-Covid levels. This has resulted in a milestone EBITDA Margin of 31.3 per cent, which is an improvement of 1,140 bps over the first quarter of FY20."

In the fourth quarter of the last fiscal, the Tata Group firm reported a 181 per cent rise in net profit at Rs 74.19 crore against Rs 91.30 crore loss in the corresponding quarter a year ago. Sales grew 41.80 per cent to Rs 872.08 crore in Q4 of last fiscal against Rs 615 crore in the corresponding quarter of the previous fiscal.

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On an annual basis, Indian Hotels' loss narrowed by 65.60 percent to Rs 247.72 crore in the last fiscal against Rs 720.11 crore in the March 2021 fiscal. Revenue zoomed 94 per cent to Rs 3,056 crore in the fiscal ended March 2022 against Rs 1,575 crore for the fiscal ended March 2021.

 Mapping the Expansion Path

The company has adopted a rapid expansion path as it said it was on track to achieve its targeted portfolio of a total of 300 hotels by 2025.

Currently, the company has 242 hotels, including 61 under development, in total across brands such as the Taj, SeleQtions, Vivanta and Ginger with a combined 29,000 rooms.

Under its 'Ahvaan 2025' strategy, IHCL said it will expand its footprint in relatively untapped destinations such as North East India besides key global markets that have substantial customer crossover with India, through strategic partnerships.

"Over the last 24 months, IHCL has rapidly expanded with two hotel signings each month," Chhatwal said.

 Experts' Take

Here's a look at what analysts said about the prospects of the Indian Hotels stock.

Tirthankar Das, Technical & Derivative Analyst, Retail, Ashika Stock Broking

"The stock is in a strong uptrend forming higher peak and higher trough in all time-frame and amid the stretch, one can expect the stock to continue with its outperformance. The stock is seen resuming up move after last few sessions of breather taking support at the 20 DMA (currently placed at Rs 275) and thus offers fresh entry opportunity. The stock is now on the verge of registering a fresh breakout above the rising supply line joining the highs of October 2021 ( Rs 229) and May 2022 ( Rs 270) signalling strength and continuation of the upmove. Hence, it can be expected that at the breach of immediate resistance level of Rs 300, momentum is likely to garner further strength and head towards Rs 360- Rs 370 (channel pattern target) in the near term."

Pavitraa Shetty, co-founder & trainer, Tips2Trades

"Strong pent up demand after Covid-19 and recent holiday seasons have ensured major recovery in both profits and stock prices of hotels including Indian Hotels. Currently, the stock is a little overbought and hence investors are advised to keep booking profits at current levels and wait for a dip near 255 levels to re-enter for higher targets of 333 in the coming months."

Palak Kothari, Senior Technical Analyst, Choice Broking

"Since September 2021, the stock was trading within the Rs 140- Rs 160 range. After that strong price action led to robust volume generated excellent return (current market price  Rs 296.60) within 12 months' time frame. On a monthly chart, the stock has been trading with higher high and higher low formation for the last 3 months which suggests continued strength upside. On a weekly chart, the stock has been trading in a rising wedge formation and crossed the upper band of formation which points out strength in the counter.

Additionally, the stock has been trading with the support of the rising trend line and crossed the previous resistance level i.e Rs 270 level, and managed to sustain above the same adding bullish momentum to the counter. On a daily chart, the price has been trading above the upper leg of "Bollinger Band" which suggests a bullish rally will continue further in the near term. Moreover, the stock has been trading with the support of 21 DMA as well as Super Trend on a daily chart adds bullishness to the prices. Further moreover, the stock has moved above "Ichimoku Cloud" with a positive crossover between the conversion line and the baseline, which shows the upside movement in the counter. A daily momentum indicator Stochastic & MACD shows positive crossover which adds more bullishness to the price. As per the above technical parameters, the stock is looking bullish on the chart. One can buy the stock at CMP Rs 296, and a fall to Rs 287 is a good buying opportunity for the target of Rs 345, Rs 400 levels while on the downside, the support comes at  Rs 250 levels."

About the Company

Indian Hotels is engaged in short-term accommodation activities, and restaurants and mobile food service activities. The company is primarily engaged in the business of owning, operating and managing hotels, palaces and resorts under various brands, including Taj, SeleQtions, Vivanta, The Gateway, Ginger, Expressions, ama Stays and Trails and TajSATS.

The Tata Group's hospitality arm also operates restaurants, food and beverage business under Golden Dragon, Wasabi by Morimoto, Thai Pavilion, House of Ming and Shamiana brands..

Published on: Sep 02, 2022, 3:00 PM IST
Posted by: Aseem Thapliyal, Sep 02, 2022, 2:44 PM IST