rakesh jhunjhunwala news: Rakesh Jhunjhunwala’s hotel bet sees a V-shaped recovery in the third quarter. Time to check in?
Occupancy levels improved, cost reductions continued and the level of Ebitda was close to pre-Covid levels. Debt levels have also fallen, said analysts who take a broadly positive view of the stock, with price targets suggesting upside potential of up to 30%.
With a huge inventory of rooms, IHCL will be a key beneficiary of the sustained recovery in the domestic and international hotel space, said Sharekhan who revised its target on the stock to Rs 286.
The certificate was trading flat at Rs 218.50 in Thursday’s trade.
Jhunjhunwala and his wife Rekha Jhunjhunwala each owned 1.08% of the Tata Group company.
The hotel business reported a consolidated net profit of Rs 95.96 crore for the quarter, compared to a net loss of Rs 133.22 crore in the corresponding quarter last year. The hotel’s EBITDA margin was 29% compared to 10% in the September quarter and a negative figure in the prior year quarter, thanks to the recovery of sales and continued cost optimization.
What analysts liked about the third quarter results was self-occupancy and average rent (ARR) which fell back to 69% and to Rs 12,915 in December. Ginger Hotels’ revenue rebounded to 93% in the third quarter and occupancy was 62%.
The international hotels, The Pierre (USA) and St. James Court Hotel (UK), recorded positive Ebitda for the second consecutive quarter. Additionally, consolidated gross debt was reduced by Rs 1,350 crore, with a net debt to equity ratio of 0.32 times.
What analysts didn’t like was a slow recovery in business in key metropolises such as Mumbai, Bengaluru and Delhi-NCR. The recovery there was 60-75% compared to pre-Covid levels.
Nirmal Bang Institutional Equities said it remains positive on IHCL’s recovery due to strong growth environment with V-shaped recovery in demand, cost optimization, which will help improve margin of Ebitda and strong brand recall.
He likes IHCL’s approach to revenue growth and diversification to include other verticals like Ginger, Qmin, Ama Trails and Chambers.
After the quarterly results were announced, IHCL’s Executive Vice President and Chief Financial Officer, Giridhar Sanjeevi, said his company had deployed the capital recently raised through the rights issue to repay its debt, bolstering its focus. to be a company without long-term debt.
“We maintain the Buy rating on IHCL with a target price of Rs 284 which is based on 17 times the midpoint of FY23-24E EV/Ebitda. Our revised valuation is due to a change in capital structure as the company raised equity to finance some part of the debt and also towards the acquisition,” said Nirmal Bang.
Antique Stock Broking has a target of Rs 250 on stock. Motilal Oswal Securities maintained its buy call. Edelweiss, meanwhile, believes IHCL’s leisure-focused outperformance is about to peak and will moderate going forward.
“Demand was driven by leisure travel, clearly visible in the city’s performance. IHCL continued its recovery above the industry, with Goa once again the top performer. business is also visible. We are incorporating proceeds from the rights issue and keeping estimates unchanged,” Edelweiss said while suggesting a target of Rs 207, which was lower than Thursday’s price.