ITC, Indian Hotels, Lemon Tree among Siddharth Sedani's favourite stocks

SID ki SIP: Siddharth Sedani of Anand Rathi Securities has handpicked four stocks from the hotel industry space. On his 'buy' list are  — Indian Hotels (INDHOTEL), Lemon Tree Hotels (LEMONTREE), ITC and RateGain Travel (RATEGAIN). The market expert believes these companies are set to benefit from events such as the ongoing Indian Premiere League (IPO), and the 2023 Cricket World Cup, to be hosted by India later this year.

He recommends a horizon of 6-12 months for his four stocks picks under the Namaste India theme:

Sedani pointed out that the collective occupancy level of India's hotel industry stood at around an estimated 73-75 per cent in the quarter ended March 2023. He expects the average room rate to expand by 20 per cent with 10 per cent to 12 per cent growth in demand.

He also believes that normalisation of corporate travel in India is another key positive for the country's hotel industry.

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Here's a look at what Sedani makes of the four stocks:

Indian Hotels Company | Target price: Rs 400 | Return: 25 per cent

Sedani pointed out that in the current financial year, which ends in March 2024, Indian Hotels may witness a boost in occupancy owing to the G20 Summit and the Cricket World Cup, as people worldwide will opt for high-end hotel stays.

Indian Hotels clocked an occupancy rate of 72 per cent and an average room rate of over Rs 15,400, said Sedani.

He placed a target price of Rs 400 for the Tata group stock, which implies a potential upside of almost 25 per cent from its closing price on April 3.

ITC

Siddharth Sedani is positive on ITC for its 11,000+ hotels spread across 80 destinations. He has a target price of Rs 416 for the Indian Hotels stock (10 per cent upside).

Lemon Tree Hotels

He has set a target price of Rs 110 for the stock, implying an upside of 42 per cent.

RateGain Travel Tech

The analyst expects the business of RateGain Travel Tech — a software as a service (SaaS) company providing services for the hotels industry — to grow around 40 per cent.

He has set a target price of Rs 450 for the stock (29 per cent upside).

Fund allocation

The Anand Rathi Securities analysts recommends allocating 30 per cent each to Indian Hotels and ITC, and 20 per cent each to Lemon Tree and RateGain.

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