Tata Group stock has no 'sell' rating among analysts after Q4 results; Check price targets

Shares of Indian Hotels Company Ltd. are in focus on Tuesday, May 12, after the company reported a good set of earnings for the fourth quarter that slightly beat estimates.

Q4 Results Highlights

The company's profit after tax (PAT) increased 15.8% to ₹625.2 crore from ₹540 crore last year. Its revenue was up 14% at ₹2,765.3 crore from ₹2,425.14 crore.

Indian Hotels' earnings before interest, tax, depreciation and amortization (EBITDA) increased 13.5% to ₹972.68 crore from ₹856.78 crore in the previous year. Its margins contracted marginally to 35.2% from 35.3% in the year-ago period.

Brokerage firm Motilal Oswal had expected revenue of ₹2,690 crore, EBITDA of ₹960 crore and PAT of ₹552 crore.

Its hotel services' revenue increased 14.2% to ₹2,452 crore from ₹2,148 crore last year, its EBITDA was up 15.9% at ₹771.7 crore from ₹665 crore while margins expanded to 31.5% from 31% in the fourth quarter last year.

The company's catering segment's revenue increased 13% to ₹314.9 crore from ₹278.6 crore, EBITDA was up 2.3% at 58.1 crore, while margins contracted to 18.5% from 20.4% in the year-ago period.

The change in airport levy method negatively impacted its operating margins by 1.1%.

Indian Hotels' consolidated revenue per average room (RevPAR) increased 10% to ₹13,250 and the company reported 78% occupancy. Taj's revenue per average room was up 10% as well at ₹20,700.

The West Asia conflict impacted the company's growth by 15% in January and February and by 11% in March. It reported a ₹40 to ₹45 crore impact, the company stated.

What Are Analysts Saying

Brokerage firms UBS and Goldman Sachs both have "buy" ratings on the stock and see an upside potential of up to 34% from current levels.

UBS

UBS has a price target of ₹900 apiece on Indian Hotels.

It said the company's fourth quarter was resilient despite geopolitical headwinds.

This was underpinned by strong operating metrics with core hotel RevPAR growing 10%, driven by average room rate (ARR) growth, while occupancies improved 100 basis points to 78%, UBS said.

It added that the management flagged a ₹40 crore to ₹45 crore impact from West Asia-related disruptions in March.

Goldman Sachs

The brokerage has a price target of ₹790 per share on Indian Hotels.

It said the company reported a strong RevPAR growth of 12% on a standalone basis, an acceleration compared to 7% growth in the third quarter.

It said occupancy expanded from 80% to 82% from last year and ARR grew by 10%. As a result, its standalone revenue increased 12.5% compared to last year, while the brokerage had estimated an 8% growth.

Goldman Sachs said Indian Hotels delivered the strong performance despite geopolitical headwinds in March that caused cancellations of MIC events, weak occupancies in some international hotels and weak international arrivals in India.

The management mentioned that domestic tourism demand continued to be strong and helped make up for some weakness otherwise in March, the brokerage added.

Of the 31 analysts who have coverage on the stock, 26 have a "buy" rating while five have a "hold" rating.

Indian Hotels shares ended the previous session 1.2% lower at ₹664.8 apiece. The stock has gained 4.7% in the past month but declined 9.99% this year, so far.