2022 Ke SuperStar: Nirmal Bang CEO Rahul Arora sees 40-50% upside in this hotel stock – know reasons here

In a special segment of 2022KeSuperstar, Nirmal Bang Institutional Equities chief executive officer Rahul Arora picks Tata Group-backed Indian Hotels shares for bumper returns during an exclusive conversation with Zee Business Managing Editor Anil Singhvi on Friday. 

Arora, while explaining why this stock is a perfect bet in the upcoming year, mentioned that even from current levels the shares of Indian Hotels could show an upside of around 40-50 per cent. 

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Indian Hotels, one of the prominent names in the hospitality sector, has a beautiful brand name and is a subsidiary of the Taj Group of Hotels owned by Tata Group.  

The Nirmal Bang CEO pointed out that Indian Hotels is getting into a super-cycle with improve occupancy levels amid a rising trend of staycations and wedding season. He believes the occupancy level could also be able to sustain further this occupancy level by the company. 

With respect to super-cycle, as a concept, Arora described that the return on equity and return on capital employed of this stock is around 18-20 per cent, and both of these levels are likely to increase in another 18-24 months going forward. 

Similarly, the stock is not an expensive one as it is available at 10 times EV/EBITDA with respect to one year view, Arora further said.  

While listing other positives, Nirmal Bank CEO mentioned that the cost controls done by the management on the basis of employee per room and rent negotiations will help the company. 

Besides, the debt reduction done by the company is also a positive, Arora said, adding further that in the next two years the debt will be halved from the current levels and free cash flow would be visible. 

Indian Hotels on Friday closed on a negative note, down over 2 per cent to Rs 176.65 per share on the BSE, as compared to a 0.33 per cent fall in the S&P BSE Sensex.