HDFC Securities Initiates Coverage On Hotel Sector, Picks 2 Stocks Offering Return Up To 50%, Buy

Leading brokerage firm HDFC Securities has initiated coverage on Hotel Sector stocks and picked 2 stocks showing upside potential of up to 50%. These two stocks are Indian Hotels Company Ltd (IHCL) and Lemon Tree Hotel. The analyst has assigned add call to Indian Hotel and buy call to Lemon Tree Hotel.

According to the analyst, "India's hotel industry has witnessed a robust turnaround in demand after the pandemic, led by the rising discretionary spending on tours and travels, revenge tourism, improving economic environment fuelling corporate travels and revival of mega wedding season and other cultural events. Furthermore, with demand outpacing." Check details below:

1. Add Indian Hotels Company Ltd

HDFC Securities has assigned "add" call to Indian Hotels Company Ltd with a target price of Rs 345 apiece. The mid cap stock's current market price is Rs 286.70 apiece with intraday fall of 1.48%.

If you add Indian Hotels Company shares now, you will likely receive an upside of 21%. The stock has given a return of 10% in last 6-months, and 42% in last 1-year. In last 3-months, it fell 11%.

The stock's 52-week high is Rs 348.70 apiece and 52-week low is Rs 180.75 apiece, respectively. The company has a market capitalisation of Rs 40,722.88 crore.

According to HDFC Securities, "We initiate coverage on IHCL with ADD recommendation and a TP of INR345 by ascribing a targeted FY25 EV/EBITDA multiple of 22x, which is still discount to the past five-year average two year forward EV/EBITDA multiple range of 25x-26x. The conservative stance is primarily to factor in the rising inflationary concern and slight moderation across the rapid spur witnessed across the segment post pandemic."

2. Buy Lemon Tree Hotel

The analyst has recommended investors to buy Lemon Tree Hotel with a target price of Rs 108 apiece. Current market price of Lemon Tree Hotel is Rs 72.90 apiece with intraday decline of 2.74%. If you buy Lemon Tree Hotel Ltd now, you will get potential return of 50%.

The company has a market capitalisation of Rs 5,775.48 crore. Lemon Tree's 52-week high is quoted at Rs 103.30 apiece and 52-week low is Rs 45.30 apiece, respectively. The mid cap stock witnessed a fall in value of 15% in last 3-months, gave a return of 10% in last 6-months, and a return of 56% in last 1-year. In last 3-years, the stock rallied 37%.

According to HDFC Securities, "Both Indian Hotel and Lemon Tree Hotel have a strong pipeline of room additions based on an asset-light model. This, along with sustainable cost reduction initiatives undertaken during the pandemic is likely to drive their toplines and spur margins without leveraging their balance sheets. Rather, the improving RoCE and strong cash flow would help both IHCL and LTH bring down their net D/E significantly by FY25E-FY26E to -0.3% and 0.9% respectively."

 

Disclaimer

The stocks have been picked from the brokerage report of HDFC Securities. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decision.