Long-Term Bet: A Hotel Stock with ATH Breakout + ATH Profit!

  • Stock Market Analysis

While investors are witnessing some selling pressure on Wednesday on account of an overnight red trading session in the US markets, some stocks are unscathed. The Nifty 50 benchmark index is down 0.29% to 18,094, by 10:35 AM IST with mixed sectoral breadth. However, the mid-cap and small-cap spaces are currently holding their ground with decent buying interest so far.

One counter from the mid-cap space that has just delivered a humongous all-time high breakout is Indian Hotels Company Limited. It owns and operates a chain of luxury hotels such as Taj, Vivanta etc., having a market capitalization of INR 49,351 crores, making it the 104th largest listed stock on the NSE.

IHCL sources of revenue and other financial information

Image Description: IHCL sources of revenue and other financial information

Image Source: IHCL Investors presentation

FY23 turned out to be the best year ever for the company as it crossed a milestone of INR 1,000 crores in free cash flows, which was 3.5x higher than the pre-Covid-19 levels. It also garnered a record revenue of INR 5,952.1 crores in FY23, consequently leading to a net income of INR 921.19 crores. FY23 was not just the first profitable year after FY20, but also the best one. In fact the combined loss of FY21 and FY22, which was at INR 967.83 crores was almost coped up fully in FY23.

FY23 also saw the highest-ever hotel opening by the company, with a total of 16 openings and signed 36 new ones, averaging about 3 signings per month. This expansion has also been done internationally with 2 Taj Hotels in Riyadh and Dhaka and 1 Vivanta hotel in Dhaka.

All these aggressive expansion plans are denoting the potential growth in the industry that the management is forecasting. Hotel demand grew by 11.1% in FY23, as compared to FY20, while room supply grew by only 4.5% in the same period. This demand-supply mismatch is what the company is capitalizing on.

Weekly chart of IHCL with volume bars at the bottom

Image Description: Weekly chart of Indian Hotels Co. (NS: IHTL ) with volume bars at the bottom

Image Source: Investing.com

On the technical front, the stock delivered a massive all-time high breakout which is a signal for the resumption of its bull run. It has already delivered a good 35% return in the last one year, but the rally seems to be getting a new catalyst in today’s session. Purely on technical grounds, the stock now holds the potential to scale to a new high of INR 420, giving investors an estimated potential gain of 16%, from the CMP of INR 360.

Read More: 2 Stocks Giving Dividends This Week!

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  • Himanshu Bhalla @Himanshu Bhalla
    Thanks sir for information
    Like 1
  • Prem Bhatt @Prem Bhatt
    Excellent
    Like 1
    • Aayush Khanna @Aayush Khanna
      Thanks, Prem.
      Like 0
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