Domestic brokerage house Motilal Oswal has reiterated Indian Hotel As its top stock pick in the hospitality industry, leveraging its brands, management is driven by its continued focus on expanding its operations through contracts.
The company said it is unlocking value by launching new/revamped brands, creating a hospitality eco-system across the country, reducing costs in a sustainable manner and judiciously deploying capital to improve return ratios. Is.
The brokerage and research firm has maintained its buy rating on Tata group stock, repeating this as your top pick with the target value of 258 per share.
“While the ongoing third Covid wave poses a threat to the near-term earnings of the hospitality sector, the higher vaccination and lower hospitalization rates will be much stronger than the second wave. Thus, we view this weakness as a buying opportunity,” the note said.
Motilal Oswal believes that Indian Hotels augurs well for RoCE expansion with higher EBITDA margins generating new/renewed revenue along with asset-light model.
However, it said the major risks to its call are prolonged delays in demand revival due to the pandemic, intense competition in acquisition of rooms under management contracts and failure to scale up new businesses.
“Like FY 2012, we expect a strong recovery in FY 2013E / FY 24E, along with an improvement in ARR, once economic activities normalize, business travel as well as leisure segment, Cost rationalization efforts, F&B earnings increase as banqueting. Conference resumed, and higher earnings from management contracts,” the brokerage note added.
As per the BSE shareholding pattern, veteran investor Rakesh Jhunjhunwala and his wife Rekha Jhunjhunwala have increased their stake in Indian Hotels to 1.08% during the period October-December 2021. He held 1.05% stake in the previous quarter of September 2021.
The views and recommendations given above are those of individual analysts or broking companies and not of Mint.
Never miss a story! Stay connected and informed with Mint.
download
Our App Now!!
,