July5 , 2022

jhujhunwala stocks: Analysts are bullish on this Rs 667 crore-Jhunjhunwala bet. Here’s why

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NEW DELHI: Tata Group firm (IHCL) is out with its annual report and the key takeaways from it includes the management’s focus on asset-light growth through management contracts. Revenue growth and margin expansion will go hand in hand, analysts who read the annual report said, adding that the recent guidance is realistic and achievable.

Ace investor Rakesh Jhunjhunwala and his wife Rekha owned a total 2.12 per cent stake in the hotel as of March 31, which is valued at Rs 667 crore as of Thursday’s trade.

The annual report, said

Securities, highlights the company’s efforts to grow its existing and new businesses, improve its margins, and deploy its capital efficiently to generate better returns. It sees the stock at Rs 278.



has cut its target for the stock marginally to Rs 284 from 292. The two price targets suggest 29-31 per cent upside over Wednesday’s closing price of Rs 215.60.

On Thursday, the scrip rose 2.97 per cent to hit a high of Rs 221.60

The company’s FY22 annual report reiterates the company’s plans to execute its “AHVAAN 2025” strategy, which it announced in May.

The strategy essentially focuses on four key pillars including reaching a total of 300-plus hotels across the portfolio and clocking a consolidated Ebitda margin of 33 per cent by FY26 with 35 per cent Ebitda share from management contracts and new businesses. The company also wishes to achieve a 50:50 ratio between owned/leased and management contract room keys and is looking to retain a net cash balance sheet while pursuing its growth plans.

“The AHVAAN strategy is an extension of the company’s earlier Aspiration 2022 strategy which focused on asset light expansion and improvement in margins. We believe that the growth and margin targets set by the company management are realistic,” said ICICI Securities.

The brokerage estimates FY23 consolidated revenue to grow 54 per cent YoY to Rs 462 crore, which would be 104 per cent of FY20 level. It sees FY24 revenue to grow 18 per cent YoY to Rs 5,450 crore at an Ebitda margin of 32 per cent.

The company said its April and May revenues were 10 per cent higher than pre-Covid levels and with sustained pickup in business travel along with leisure, ICICI Securities expect FY23E revenue and FY24E revenue at 104 per cent and 122 per cent of pre-Covid (FY20) levels, respectively.

Motilal said IHCL’s asset-light model, and new and reimagined revenue-generating avenues, with higher Ebitda margins, bodes well for an expansion in RoCE.

Like FY22, it expects a strong recovery in FY23 and FY24, led by an improvement in ARR once economic activity normalizes; improved occupancies, led by business travelers as well as the Leisure segment and cost rationalisation efforts.

This brokerage also sees an increase in F&B income as banqueting/conferences normalises and higher income from management contracts.

(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)



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