Stock to buy: This multibagger Tata Group company shares gain over 116% in a year; brokerage recommends this

Rakesh Jhunjhunwala-backed multibagger Tata Group company stock – Indian Hotels Company Limited (IHCL) share price extending gains has hit a fresh record high of Rs 313.7 per share on the BSE intraday on Wednesday. The scrip has registered over 116 per cent growth in the last one year. 

Rakesh Jhunjhunwala, who passed away recently held 3,00,16,965 equity shares or 2.1 per cent stakes in IHCL, as per June shareholding pattern of the company on the BSE. 

IHCL, along with its subsidiaries, offers a fusion of warm hospitality and world-class service. These include Taj – the iconic brand for the most discerning travellers, SeleQtions – a named collection of hotels; Vivanta – sophisticated upscale hotels; and Ginger – revolutionising the lean luxe segment. 

Axis Securities expect IHCL to generate FCFF of Rs 1,000-1,500 crore per year after incurring a minimal capex of Rs 400 crore per year over the next 3 years and expected to incur a Capex on maintenance, Ginger Santa Cruz, and the Kevadia which would be 10 per cent of the overall Capex.  

The brokerage expects IHCL’s RoIC to improve to around 13.2 per cent in FY24E. The company’s RoIC is currently dragged by two major investments of Searock investment and international subsidiaries.  

IHCL is looking for a strategic partner to offload a stake in Searock Investment while the company is on track to monetize a few international assets, Axis Securities said, expecting both these steps to improve RoIC in the next 2-3 years. 

The brokerage initiates coverage on Indian Hotels Company Ltd (IHCL) with a BUY rating and a target price of Rs 360 per cent (EV/EBITDA 26x for FY25E EBITDA), implying an upside of 16 per cent from the current market price.