This Jhunjhunwala-owned hotel park has grown 32% so far in September
Shares of Indian Hotels Company (IHCL) hit a new high of Rs 185.05, up 7% on BSE in intraday trading on Wednesday, in hopes of a recovery in business after the unblocking of the economy and the resumption of travel. The stock is trading higher for the fourth day in a row, rising 24% during the period.
So far in September, the share of the Tata group company has climbed 32 percent, compared to a 3.2 percent rise for the S&P BSE Sensex. Leading investor Rakesh Jhunjhunwala and his wife Rekha Jhunjhunwala collectively held 2.1% stake in IHCL as of June 30, 2021.
IHCL is expected to post its largest monthly gain in over two decades. Earlier, in August 2021, the stock had risen 35.7% during the month. The previous record one-month gain was in August 1999, when the stock had climbed 52 percent in a single month.
On August 23, IHCL announced a plan to raise funds of Rs 3,000 crore through a rights issue to existing shareholders of the company. The aim of the issue is to meet the company’s financing needs for capital spending, growth plans and debt repayment and will be finalized in consultation with investment bankers, the company said. .
IHCL and its subsidiaries bring together a group of brands and companies that offer a fusion of warm Indian hospitality and world-class service. These include Taj – the iconic brand for the discerning traveler and the world’s strongest hotel brand and India’s strongest hotel brand according to Brand Finance 2021, SeleQtions, a named collection of hotels, Vivanta , sophisticated high-end hotels and Ginger, which is revolutionizing the lean luxury segment.
The Tata group owns 40.75 percent of the capital of IHCL through Tata Sons (38.09 percent of the capital) and other group companies. Tata Sons has demonstrated its financial support to IHCL over the years, endorsing various fundraising activities of the company and expects the same to continue as well, should the need arise. The company also benefits from considerable financial flexibility and lender / investor comfort thanks to the lineage of the Tata group.
Like other hotel players, rating agency ICRA expects the company’s revenue and profits to reach pre-Covid levels only in the medium term, although the financial year 22 should be significantly better than exercise 21.
The situation is still evolving and depends on the pace of vaccination, the effectiveness of vaccines, infection rates and the possibility of a third wave of Covid-19, or any other exogenous event. The proposed equity infusion and resulting debt reduction, aside from better accrued liabilities resulting from the resumption of operations, are likely to improve hedging measures in the future, ICRA said in the scoring justification.