Rakesh Jhunjhunwala portfolio: Motilal Oswal bullish on this stock; here's why

The stocks of market mavens of Dalal Street are widely tracked by investors. Brokerage house Motilal Oswal is bullish on Indian Hotels Company Limited (IHCL), a part of Big Bull's portfolio, which operates the Taj Group of Hotels.
 
The stock has delivered over 62 per cent return in the last one year. With a market capitalisation of Rs 26,262 crore, the shares stand higher than 5 day, 20 day, 50 day, 100 day and 200 day moving averages.
 
It ended 0.80 per cent lower at Rs 198.75 against the previous close of Rs 200.35 on BSE.
 
Motilal Oswal noted that the hotel industry has witnessed a notable demand revival in the Leisure Travel segment. A revival in corporate demand would remain a key monitorable. Demand recovery would push up occupancies, followed by average room rate (ARR) growth.
 
For IHCL, the brokerage house noted that the occupancy rate (ORR) recovered to 94 per cent of pre-COVID level v/s 87 per cent for the industry, while RevPAR in Delhi, Mumbai and Bangalore remained at 75 per cent. Also, the company outperformed its peers on RevPAR growth front
 
“Like in FY22, we anticipate the strong recovery to sustain in FY23/FY24 as well based on ARR improvement, once the economic activities normalize, improved occupancies driven by business travel as well as leisure segment, cost rationalization efforts, and an increase in F&B income as banqueting/ conferences resume,” it added.
 
"We maintain BUY on IHCL with an FY24-based target price of Rs 265 (premised on one-year forward EV/EBITDA multiple of 21x)," Motilal Oswal said.
 
As per the shareholding pattern, Rakesh Jhunjhunwala has raised his stake in the hospitality company from 2.10 per cent to 2.16 per cent in recently ended December 2021 quarter.
 
In December 2021, Tata Group-owned hospitality major announced that it has acquired 100 per cent shareholding in ELEL Hotels & Investments from the Nanda family.
 
The announcement came after Indian Hotels Company in July 2020 had inked a pact to acquire the remaining 14.28 per cent stake in ELEL Hotels and Investment.