Why This Tata Stock Bumped Sharply On Friday Morning

Shares of Indian Hotels Company bumped up sharply on Friday morning going up around 1.5% to hit an intraday high of ₹428.40.

What Happened: The surge today comes as domestic brokerage firm Kotak Securities initiated coverage on the stock with an “add” rating an target price of ₹460. The target indicates an around 9% upside from the stock’s last closing price of ₹421.70.

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The analysts said that the hotel giant is poised to improve its revenue bolstered by the addition of new keys and an upward trajectory in average room rates (ARRs). The brokerage anticipates a substantial increase in the number of keys managed under contracts, contributing positively to management fees. The domestic brokerage also highlighted that the company’s “operational cash flows remain strong reflecting improved business performance.”

In its note, the brokerage also pointed out that Indian Hotels’ has a strong and liquid balance sheet. As of September 2023, the company holds a net cash reserve of approximately ₹1,000 crore. The brokerage firm however said that lower-than-estimated ARR growth and delays in the commissioning of new assets
remain the key risks to the Tata Group company’s earnings.

Price Action: IHCL’s share price was up 1.06% to trade at ₹426 in the early hours of trading on Friday.

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Posted In: EquitiesPrice TargetInitiationMarketsAnalyst RatingsMoversTrading IdeasIndian Hotels CompanyKotak Institutional Equities