Tata stock to buy: Jefferies says buy this stock for 23% upside

Jefferies on Thursday suggested a 'Buy' on Indian Hotels Co Ltd, a Tata group stock, with a target price of Rs 875, implying 23 per cent potential upside. The target comes after Jefferies met IHCL's MD & CEO Puneet Chhatwal for a fireside chat at Jeff India Forum. Jefferies said the IHCL management remained highly constructive on the long runway of India's hospitality upcycle.

"Strong Q1 momentum has sustained into Q2, underpinning confidence of exceeding FY27 revenue growth guidance of 12-14 per cent. Over the next few years, IHCL targets 10 per cent LFL growth and 5 per cent non-LFL growth, supported by a robust pipeline, new business growth and favourable demand-supply dynamics," Jefferies said.

The foreign brokerage said the IHCL management indicated that it remains open to acquisitions, particularly in India, where opportunities can strengthen its portfolio and accelerate growth through capital-light models.

Key considerations included strategic fit, brand compatibility, potential returns, acquisition cost, renovation requirements and operational disruption. The management also emphasised disciplined capital allocation, noting that several opportunities are evaluated but rejected.

Jefferies said the management expects sustained growth, supported by a 300-hotel pipeline and 50 annual openings from currently visible projects. Ginger, it noted, is growing at 25 per cent, while established businesses could deliver 10 per cent LFL growth, primarily through room-rate hikes, over and above 5 per cent non-LFL growth.

"Diversification across 12 brands, geographies and business models should support growth, profitability and cash generation, with 70 per cent of Ebitda converting into FCF, aided by strong operations and rising asset-light contributions," it said.