A Detailed Equity Research Report on THE INDIAN HOTELS COMPANY LIMITED

Summary

A Detailed Equity Research Report on THE INDIAN HOTELS COMPANY LIMITED with a tagline Transforming Travel with Innovation & Accessibility.

THE INDIAN HOTELS COMPANY LIMITED

KEY STOCK STATISTICS:

Market Capitalization (crs): 59287 /-

Book Value: Rs.57.70 /-

Face Value: Rs. 1/-

52 week High/Low:  436/280

P/E Ratio: 56.20

P/BV: 7.20

Dividend Yield: 0.24/-

Source: www.sharescart.com 

Shareholding Pattern(%):

Returns (%):

Source: Company, KFO Research 

COMPANY ANALYSIS:

AHVAAN 2025:

SUSTAIN REVENUE GROWTH AND STEP-UP PROFITABILITY IHCL’s margin expansion is driven by the diversification of top-line to highmargin businesses through higher growth in management contracts and new brands and businesses. The Company’s existing hotels are adding significantly to its profitability due to various asset management initiatives. The renovation of existing hotels, the addition of new hotels on a management fee basis, and growth in the new businesses of Ginger, Qmin, amã, as well as The Chambers have led EBITDA to grow to 32.7% vis-a-vis a guidance of 33% under Ahvaan 2025.

STRENGTHEN BALANCE SHEET :

Following the equity issuance of ₹4,000 crores in FY 2021-22, IHCL is a Zero-Net Debt Company. Our emphasis on strong free cash flows has resulted in over ₹1,000 crores liquidity on the balance sheet.

SCALE UP :

Scaling up individual brands is critical to IHCL’s growth and profitability aspirations. Taj and the rest of the portfolio is a healthy 50:50. As on 30th April 2023, Taj is a portfolio of 100 hotels. Ginger has 85 hotels and is getting close to 100. amã Stays & Trails has already reached 117. Vivanta and SeleQtions have crossed 75 hotels and IHCL plans to reach 50 hotels in each of these respective brands and platforms this year.

Source:Company, KFO Research

FUTURE OUTLOOK:

FY 2022-23 continued to be a year of strong recovery in the Indian travel and tourism industry. Restrictions on flights were relaxed in most countries into and from India. Travel restrictions, documentation and certifications were also progressively relaxed for travel within India. Consequently, demand for accommodation grew significantly, mainly arising from domestic leisure travel, weddings, social events, conferences and resumption of business travel within the country. Foreign tourist arrivals were 6.19 million for the calendar year 2022 in comparison with 1.52 million in 2021.

BUSINESS HIGHLIGHTS & ANALYSIS:

PROS

• Company is expected to give good quarter.
• Company has delivered good profit growth of 58.5% CAGR over last 5 years.
• Debtor days have improved from 36.5 to 28.0 days.

CONS

• Stock is trading at 6.75 times its book value
• The company has delivered a poor sales growth of 7.20% over past five years.
• Company has a low return on equity of -1.31% over last 3 years.

Growth Drivers:

ü  Upcycle continues with Demand outpacing Supply

ü  Indian Hospitality –A market penetration story.

ü  G20 Summit, Cricket World Cup, Miss World Pageant, FTA growth

ü  The Board of Directors has granted in-principle approval for IHCL or one of its subsidiaries, Subject to receipt of requisite approvals, to purchase 100% equity of Pamodzi Hotels Plc ( presently a listed company in Zambia) from an international subsidiary of Tata International Ltd.

ü  Pamodzi Hotels Plc has long term lease hold rights for Taj Pamodzi, Zambia. IHCL presently operates this hotel.

ü  The Board has accorded its approval, subject to requisite regulatory approvals as required, to enter into a Lease Agreement, for operation of a hotel in Frankfurt, Germany, for a period of 20 years with right of two renewals of 5 years each.

ü  We have consistently grown our hotel brands to remain connected with the emerging needs of the industry. Our expansion efforts have been accelerated through a combination of management contracts and self-funded projects across our Taj, SeleQtions and Vivanta brands while driving Ginger’s expansion primarily through operating leases.

VALUATIONS:

ü  On the basis of EPS Multiple Method, we are recommending ‘Buy’ for the stock. Since the stock offers good opportunity, we initiate a ‘BUY’ signal on the stock with 12-month price target of Rs 558/- share an upside of 33.18 % from current levels.

PEER COMPARISON:

Source: www.sharescart.com 

BALANCE SHEET ( RS. IN CRORES):

CASH FLOW STATEMENT (RS. IN CRORES):

PROFIT AND LOSS ACCOUNT ( RS. IN CRORES):

Source: www.sharescart.com