Jefferies likes 4 travel and tourism stocks for potential gains of up to 42%
Jefferies held that the consumer preference for experiential and luxurious travel will boost the sector's growth.
Global brokerage Jefferies continues to like the travel and tourism space citing record wedding season, revival in foreign tourist arrivals (FTAs), Maha Kumbh and limited supply as one of the major triggers for the industry. Likewise, it has reiterated its 'Buy' stance on four of the counters from the space.
Jefferies travel and tourism stock picks
Jefferies to play the travel theme in India is bullish on Indigo, Indian Hotels, GMR Airports & TBO Tek.
Order of preference for stocks as suggested by Jefferies
The brokerage's preference is in the following order, Interglobe Aviation-the parent company of Indigo, followed by Indian Hotels, GMR Airports & TBO Tek.
Indigo target price
Jefferies has raised the target on the stock to Rs 5,260 from the previous Rs 5,100, implying potential upside of nearly 24 per cent.
Rationale for a buy on Indigo
The brokerage remarks that Indigo is a strong franchise with a dominant market share of more than 60 per cent in the domestic air travel. The brokerage underlined that the recent stock underperformance follows a sharp miss in 2Q results, on higher costs, nonetheless it anticipates cost normalisation going ahead.
Indian Hotels (IHCL) target price
On the stock, the brokerage has increased target to Rs 1,000 from Rs 900, implying possible gains of 20 per cent from the last close.
Rationale for a buy on Indian Hotels
The brokerage said that a consistent double-digit growth (proxy consumer/discretionary segment) in a cyclical business will support premium valuations. Further, it anticipates a double-digit EBITDA/PAT CAGR over the medium term.
Track record of delivering on previous targets gives us confidence in deliverability on the new goals, it added. Further, the stock is seen to benefit from industry tailwinds (cyclical upturn), expansion of market share, and growth in management fee income, notes the brokerage.
TBO Tek target price
On TBO Tek, the brokerage has raised the target to Rs 2,100, implying potential upside of over 18 per cent.
Rationale for a buy on TBO Tek
The company's Gross Transaction Value (GTV) is expected to grow at a CAGR of 20 per cent. EBITDA and PAT are expected to grow at a CAGR of 24 per cent and 31per cent, respectively. TBO Tek will benefit from the growing contribution of the hotel business.
GMR Airports target price
The brokerage has pegged the target at Rs 109 for the counter, implying possible upside of 42 per cent.
Rationale for a buy on GMR Airports
The brokerage held that GMR Airports will benefit from traffic growth and new airport projects, such as Navi Mumbai Airport.