The domestic brokerage firm anticipates that the sector occupancy could improve by 500 basis points, with the annual recurring revenue (ARR) expected to grow at a CAGR of 7-8% over the coming years. This growth will likely be driven by a relatively constrained supply of rooms and an increase in Foreign Tourist Arrivals (FTAs), which remain below pre-COVID levels.
Additionally, the steady growth of the Indian middle class and their increased spending power is projected to contribute an additional Rs 5,200 crore annually to the hospitality market.
Here is a brief note on these hotel stocks from Axis Securities:
Juniper Hotels: Buy | Target price: Rs 475
Juniper Hotels presents a strong investment case, driven by impressive revenue growth projections and solid financial performance. The expected improvement in occupancies, coupled with rising ARRs, along with the company’s strategic expansion at the Grand Hyatt Mumbai, is set to significantly enhance profitability. JHL’s effective debt reduction, which is projected to improve its ROCE to approximately 13%, along with maintaining a high free cash flow to the firm (FCFF)/EBITDA ratio, further underscores its financial strength.The company’s strategic expansion plans and the improvements at Grand Hyatt Mumbai are expected to significantly increase revenue and make this hotel a key revenue driver for the company. With its properties in key Indian markets and the alignment of cash flow from operations with operating income, Juniper Hotels demonstrates a robust ability to generate sustainable cash flows. This enables the company to remain a top choice for business travellers and event organizers, capitalizing on the strength of the Hyatt brand and its extensive market reach.The shares of Juniper Hotels got listed in February 2024 at a premium of 1.4% on the exchanges. The stock debuted at Rs 365 on NSE as against an issue price of Rs 360. Meanwhile, the stock debuted at Rs 361.2, up 0.3% on BSE.The stock was trading 2% higher at Rs 414.40 on BSE around 2:30 pm today.
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Chalet Hotels: Buy | Target price: Rs 975
Chalet Hotels has developed a distinctive and integrated approach to the hospitality industry, focusing on the ownership, development, and management of premium hotels and commercial properties. Strategically located, the company’s properties are situated near central business districts, maximizing land use by developing commercial spaces on surplus land. This strategy has created additional revenue streams and enhanced the value of its developments, positioning it as a convenient destination for both accommodation and business needs.
The company presents a compelling investment case, driven by impressive revenue growth projections and solid financial performance. Expected improvements in occupancies, coupled with rising ARRs and the company’s strategic expansion across diverse micro-markets, are poised to significantly enhance profitability. Chalet’s effective debt reduction, improving its RoIC to approximately 17%, and maintaining a high FCFF/EBITDA ratio further underscore its financial strength.
The shares of Chalet Hotels were trading 2.2% higher at Rs 852.40 on BSE around 2:30 pm.
(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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