Indian Hotels shares delivered multibagger returns in three years; can they hit fresh high?

Shares of Indian Hotels Ltd have turned into multibagger, delivering  256% returns in the last three years. The hotel stock, which closed at Rs 124.08 on December 10, 2020 rose to a high of Rs 441.55 in Monday's trade, clocking 255.85% returns during the period. On the other hand, the benchmark BSE 100 index gained 58.53% during the period. The hotel sector stock is trading near its all-time high. The stock touched its record high of Rs 444.55 on December 8, 2023.

Rekha Rakesh Jhunjhunwala, wife of late investor Rakesh Jhunjhunwala, held 3 crore shares or 2.11 per cent stake in the public sector lender at the end of September 2023 quarter.   

Total 0.32 lakh shares of the firm changed hands amounting to a turnover of Rs 1.39 crore on BSE. Market cap of the firm rose to Rs 62,483 crore on BSE. The Tata Group's multibagger stock fell to a 52-week low of Rs 280.20 on January 27, 2023.    

The stock closed 1.20% lower at Rs 435.15 on BSE in the previous session.

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Brokerage Sharekhan has revised its price target to Rs 492 per share.  

"After an eventful FY2024, Indian hotels industry has good room for growth with foreign tourist arrivals (FTAs) recovering to 56% of pre-COVID levels and domestic tourism recovering to 75% of pre-COVID levels. Higher RevPar and focus on asset-light business model will consistently drive profitability and cashflows for IHCL (eyeing FY25 EBIDTA margins of 33%) in the coming years," the brokerage said 
"We re-iterate our Buy rating on Indian Hotels Company with a revised PT of Rs. 492. Stock is valued at 22x/19x/16x is FY24E/25E/26E EV/EBIDTA. Good earnings growth visibility with structural growth story of hotel industry intact," added the brokerage.  

Mandar Bhojane, Equity Research Analyst, Choice Broking said, "The stock  is trading at an all-time high of displaying a breakout of a rounding bottom chart pattern with significant volume, indicating strong bullish momentum. Additionally, the stock is positioned above key Exponential Moving Averages (EMAs), including the 20-day, 50-day, 100-day, and 200-day EMAs. This alignment above crucial EMAs strengthens the bullish outlook, suggesting the potential for sustained upward price movement. The Relative Strength Index (RSI) is presently at 63.68 and trending upwards, signaling increasing buying momentum. Furthermore, the Stochastic Relative Strength Index (Stoch RSI) has shown a positive crossover from the oversold region, reinforcing the bullish sentiment. The confluence of these technical indicators implies that Indian Hotels may have the potential to reach a target price of Rs 514 in the near term. It is advisable to consider buying on dips, particularly near Rs 420. To effectively manage risk, it is recommended to implement a stop-loss (SL) at Rs 410. This measure is crucial to safeguard your investment in the event of an unexpected market reversal. In summary, considering the technical analysis and current market conditions, Indian Hotels appears to present an attractive buying opportunity for those aiming for a Rs 514 price target, provided that prudent risk management measures are in place."

Aditya Gaggar Director of Progressive Shares said, "Indian Hotels is in a secular uptrend with a higher top higher bottom formation and recently, it has given a breakout from a V-shaped pattern. A positive crossover in MACD and ADX confirms the price behavior. As per the V-shaped pattern as well as the Higher Top Higher Bottom formation, the target is Rs 490"  

Shiju Koothupalakkal - Technical Research Analyst, Prabhudas Lilladher said, "The stock has witnessed a decent pullback from the low made near 371 zone gaining strength and has just moved past the previous peak zone of 436 levels to indicate a breakout improving the bias and anticipating for further rise. It has almost made a V-shaped recovery and has further steam left to carry on the momentum still further for next target of 460-465 levels. The near term support would be maintained near 425 zone." 

Net profit in Q2 rose 37% to Rs 167 crore on a year-on-year basis, while IHCL revenue gained 18% to Rs 1,481 crore. IHCL's EBITDA (earnings before interest, taxes, depreciation, and amortisation) surged 26% to Rs 402 crore, while the EBITDA margin expanded by 180 basis points to 27.2%.  

ICICI Securities revised its target to Rs 458 against the earlier Rs 443 post q2 earnings.   

"We retain our BUY rating with a revised SOTP-based target price of Rs 458 against Rs 443 earlier as we roll forward to 23x Sep'25E EV/EBITDA. Key risks are fresh Covid waves and discretionary consumption slowdown," said the brokerage.   

In terms of technicals, the relative strength index (RSI) of the stock stands at 67.7, signaling it's trading neither in the overbought zone nor in the oversold zone. Indian Hotels stock is trading higher than the 10 day, 20 day, 50 day, 100 day and 200 day moving averages. The stock has risen 38.67 percent in 2023 and gained 33.33% in a year.    

Disclaimer: Business Today provides stock market news for informational purposes only and that should not be construed as an investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.

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