Rakesh Jhunjhunwala stock: Tata Group company's share price hits new high after strong Q1 results – Brokerage recommend Buy, check price target

Billionaire investor Rakesh Jhunjhunwala-backed Tata Group firm stock – Indian Hotels Company Limited (IHCL) touched a new lifetime high of Rs 277 per share, after gaining by over 2 per cent on the BSE and NSE intraday on Wednesday after reporting 10-quarter high results in June quarter. 

IHCL’s consolidated revenue and EBIDTA surpassed its pre-COVID levels by gaining 24 per cent and over two-fold, respectively, in the first quarter of the financial year 2022-23 (Q1FY23) on strong recovery in domestic occupancy/ARR (Average Room Rate). 

Besides, the company’s margin improved on account of higher management fees, new businesses, cost efficiency and greater ARR and occupancy, IHCL management said in results filing.  

The management expects margin in the second half (H2) to be better than H1FY23 on account of higher room rates and believes it shall sustain in FY24. The company affirms its FY25/FY26 EBITDA margin guidance of 33 per cent each, with a 35 per cent margin accruing in from new business. 

“Going forward, the company will maintain an around 4:1 launch ratio of management contracts to owned and leased Hotels. For example, for every owned and leased investment, it will add four-to-five management contract Hotels to maintain the mix,” IHCL management said. 

Domestic brokerage firm Motilal Oswal expects the strong momentum to continue in FY23 and FY24, led by an improvement in ARR and occupancy on account of favorable demand-supply dynamics; ongoing cost rationalization efforts; higher income from management contracts; and unlocking value by launching reimagined and new brands. 

Factoring in a better-than-expected performance in 1QFY23 from standalone and key subsidiaries such as Piem and Roots, amid higher ARR and occupancy, Motilal Oswal raised FY23/FY24 EBITDA estimate by 22/11 per cent and maintained a Buy rating with a target Rs 320 apiece (18% upside). 

Rakesh Jhunjhunwala, who is also termed as the Big Bull of the Indian stock market, has 30,016,965 equity shares, which comprises over 2 per cent stake in Indian Hotels, as per the latest shareholding pattern of the company available on the BSE.