Indian Hotels Company: A Promising Investment Opportunity with a Target of Rs 492
In the world of investments, identifying lucrative opportunities often requires a keen eye and a deep understanding of market dynamics. One such opportunity that has recently garnered attention is the Indian Hotels Company. In this article, we will explore why Sharekhan is bullish on the Indian Hotels Company and recommends a ‘BUY’ rating with a target price of Rs 492.
A Dynamic FY2024
FY2024 has been an eventful year for the Indian Hotels industry. Notable events like the G-20 summit have driven robust room demand, even during a relatively weak Q2FY24. The upcoming Cricket World Cup in October/November 2023, followed by the festive season, is expected to further boost room demand in a seasonally strong Q3FY24.
A Positive Outlook
But what lies ahead for the Indian Hotels industry? According to Sharekhan’s research report, the Indian hotels sector has substantial room for growth. Foreign tourist arrivals (FTAs) have rebounded, reaching 56% of pre-COVID levels, and domestic tourism has shown remarkable recovery, reaching 75% of pre-COVID levels. This resurgence in tourism is expected to translate into higher Revenue per Available Room (RevPar) for Indian Hotels.
A Profitable Future
Indian Hotels Company Limited (IHCL) is strategically positioned to capitalize on this positive trend. The company’s focus on an asset-light business model, coupled with the anticipated higher RevPar, is projected to consistently drive profitability and cash flows. IHCL has set its sights on achieving FY25 EBIDTA margins of 33%, reflecting its commitment to sustainable growth.
The Investment Opportunity
With all these factors in mind, Sharekhan reiterates its ‘BUY’ rating on the Indian Hotels Company with a revised price target of Rs 492. The stock is valued at 22x/19x/16x its FY24E/25E/26E EV/EBIDTA, suggesting favorable valuation metrics. The Indian Hotels Company offers good earnings growth visibility, with the structural growth story of the hotel industry remaining intact.
Conclusion
In conclusion, the Indian Hotels Company presents a promising investment opportunity in a recovering and growing hospitality sector. Sharekhan’s ‘BUY’ rating, coupled with the revised target price of Rs 492, underscores the potential for investors seeking exposure to this sector. For those looking to add a robust and forward-looking investment to their portfolio, the Indian Hotels Company could be the ideal choice. Don’t miss the chance to be part of the journey towards a profitable future with IHCL.
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