This Rekha Jhunjhunwala-backed Tata Group company stock hits fresh high; what should you do?

Shares of Indian Hotels Company Limited (IHCL) – a Tata Group hotels chain company – touched a new all-time high of Rs 389.20 per share on May 25, Thursday, after gaining nearly 4 per cent on the BSE.

The rise in Indian Hotels shares can be attributed to the brokerages’ bullishness on the stock and due to strong March quarter earnings released a month ago. The counter in the last one month has surged almost 13 per cent as compared to over 2.5 per cent gain in the Nifty50 index.

Indian Hotels Q4 results

India’s largest hospitality firm on April 27, 2023, reported a multi-fold year-on-year jump in its March quarter earnings for the financial year gone by at Rs 328.27 crore against a net profit of Rs 74.2 crore logged in the corresponding quarter last fiscal.

The revenue from operations of Indian Hotels almost doubled or rose by 86.4 per cent YoY during the quarter under review at Rs 1,625.4 crore against Rs 872.1 crore in the year-ago period.

What should investors do?

Earlier today, global brokerage firm Jefferies initiated a ‘buy’ call on the stock with a target price of Rs 425 per share, which implies over 13 per cent upside.

Domestic brokerage firm Motilal Oswal expects the strong momentum of Indian Hotels to continue in FY24, on the factors such as:

• Improvement in occupancy due to multiple large global events such as G20 and ICC Cricket Men’s World Cup in 2023.
• Increase in ARR due to better demand, upgrades in hotels and corporate rate hikes.
• Higher income from management contracts.
• Value unlocking by launching reimagined and new brands.

The brokerage also maintained a ‘buy’ call on Indian Hotels with a target price of Rs 420 per share, aided by better-than-expected ARR (Average Room Rate), the addition of new owned/leased and management hotels, and the normalisation of inbound travel.

Rekha Jhunjhunwala's favourite stock

As of March 2023, Rekha Jhunjhunwala – a renowned stock market investor – has 3,00,16,965 equity shares or 2.11 per cent stake in Indian Hotels, according to the shareholding pattern of the company available on the BSE.

Ace investor Rekha Jhunjhunwala, who is the wife of late market veteran Rakesh Jhunjhunwala, publicly holds 29 stocks with a net worth of over Rs 30,100.3 crore as of May 25, 2023, according to the stock analysis portal Trendlyne.com.

Indian Hotels' share price history

In the last one year, Indian Hotels shares have gained around 72 per cent as compared to nearly 14 per cent rise in the Nifty50 index. Year-to-date, the counter surged over almost 20 per cent against the flat Nifty index during the same period.