What if you had bought Indian Hotels shares instead of taking a vacation?

mid Cap The stock witnessed a strong rally throughout the day and closed near the new 1-year high.

on BSE, IHCL shares closed up by 277.30 each 9.20 or 3.43%. Shares hit new 52-week high 278.80 each today – resulting in a jump of about 4% on the day.

The market valuation of the company is approx. 39,387.68 crores.

IHCL, which was hit during the pandemic due to the nationwide lockdown in late March 2020, has shown significant improvement in its business, and demand is seen on a sustainable path.

In March 2020, the hotel and tourism sector suffered a massive setback due to the nationwide lockdown that halted business activities of international travel, festivals, weddings, business travel and more. As on August 11, 2020, the shares of IHCL were around . Were 80.86 each on BSE.

However, with the improvement in business activities in industries, hotels and tourism sector also saw a boom. Although the second wave did manage to break into demand, rapid vaccination led to limited severity compared to the first wave and fueled an industry-wide upsurge. Shares of IHCL were at close on August 11 last year 136.58 on the same exchange.

After a year, the shares were now shy 280 points. In a span of two years, IHCL has made its journey closer to over 80 overs 278. The shares have gained approx. 198 in these two years.

That said, compared to Thursday’s closing price, shares of IHCL are up more than 50% year-over-year, while it has climbed more than 103% in one year, and rose 3.43 times in two years. has gone.

If compared to its latest 52-week high, IHCL’s shares have gained more than 51% year-on-year, gained more than 104% in one year, and nearly 3.45 in two years. The sky is touching the fold.

using the Axis Direct Return calculator, suppose an investor invests 1 lakh for a period of 12 months in the shares of IHCL, then the lump sum value will reach 2,02,927. If the shares were invested two years ago (August 2020), the lump sum value increases 3,42,768.

That is, the investment in the shares of IHCL has doubled the investment in one year. While the shares more than tripled in a span of two years.

Shares of IHCL have outperformed the BSE Sensex as well. The benchmark has grown around 9 per cent in one year, while it has grown by about 55 per cent in two years.

One of the strong gainers from IHCL shares would be Dalal Street King, Rakesh Jhunjhunwala.

As on June 30, 2022, Rakesh holds 15,729,200 equity shares or 1.11% in IHCL, while his wife Rekha Jhunjhunwala holds another 14,287,765 equity shares or 1.01% in the name. Together, the couple holds around 30,016,965 equity shares, or 2.12%.

Why did the stock climb to a 1-year high?

Investors were bullish on the shares of IHCL due to its strong earnings for the quarter ended June 30, 2022 (Q1FY23).

In Q1FY23, IHCL made a net profit of 170.05 crore on consolidated basis as compared to 277.34 crore in Q1FY22. Q1 PAT also rose by 129.21% 74.19 crore in Q4FY22. Consolidated revenue grew by a whopping 267.46% 1,266.07 crore in Q1FY23 as against 344.55 crore in the first quarter of the previous year and an increase of 45.18% 872.08 crore in Q4FY22.

Puneet Chhatwal, Managing Director and CEO, IHCL said, “IHCL has reported its best first quarter in the company’s history. This performance has been fueled by increased demand across markets and regions, with both occupancy and rates. This has resulted in a milestone EBITDA margin of 31.3%, which is an improvement of 1140 bps over Q1 FY 2019-20. In line with our outlook for Ahwaan 2025, IHCL is responsible Will continue on its trajectory of delivering profitable growth.”

In its long-term growth, the company will also significantly focus on digital enablers like Super App – Tata New. As a founding member of Tata New, IHCL has witnessed a 50% increase in its loyalty members since the launch of the app.

Should you still invest in IHCL shares?

According to Adhidev Chattopadhyay, Research Analyst, ICICI Securities, the company reported consolidated revenue of Rs 12.7 billion in Q1FY23, 9% higher than the I-second estimate of Rs 11.6 billion, stronger than the expected ARR in standalone/domestic subsidiaries. This translated into a consolidated EBITDA of Rs 3.8 billion (20% higher than I-sec estimate of Rs 3.2 billion) in Q1FY23, as operating leverage reported an EBITDA margin of 29.8% versus an estimated 27.1%. At the overall level in the domestic hotel portfolio, ARR was 31% higher than Q1FY20 (pre-Covid level), with RevPAR being 42% higher than pre-Covid levels, with demand spurt in Mumbai/Delhi NCR/Bengaluru was.

Further, Chattopadhyay quoted that as per company management, occupancy and room rates as seen in Q1FY23 are running at similar levels till first week of August ’22, with leisure travel continuing to see a pick-up in demand and business travel. Is.

“October’22-March’22 period (H2FY23) traditionally being the strongest quarter, another uptick in international travel (especially inbound), with weddings, business travel and continued leisure demand trajectory of moderate Will determine- term demand,” said the analyst.

ICICI Securities expects FY25-26E margin guidance to be achieved in FY23 itself.

Chattopadhyay said, “We increase our FY23E consolidated revenue estimate by 11%, to an earlier higher standalone FY23E RevPAR of Rs 8,104 and for similar growth in domestic subsidiaries (PIEM/Banaras/United Hotels). FY24- For 25E, we increased each of our revenue projections by 7%. With IHCL able to demonstrate pricing power across brands, we now expect operating leverage with new business contributions and we increase their FY23E consolidated EBITDA estimate by 29% to Rs.17bn and FY24E and FY25E EBITDA estimates at 16% and 17%, respectively.

In conclusion, the analyst said, “We reiterate our buy rating on IHCL with a revised SOTP-based target price of Rs 332/share (earlier Rs 284), leaving the stock unchanged at 22x Jun’24 E EV/EBITDA multiplier. Significant risk to our ratings Fresh Covid waves are impacting demand and cost escalation has reduced margins.”

first article