Tata Group stock experienced an 8% decline following the sale of a 2.06% stake in the company by HDFC Mutual Fund
Tata Group stock: India’s hotel industry has experienced remarkable growth in recent years, driven by increasing disposable incomes and a growing middle class. With more people able to afford travel, the demand for accommodation has skyrocketed. This trend is further fueled by a rising interest in both domestic and international tourism, as travelers seek unique experiences in India’s vibrant cities, picturesque beaches, and rich heritage sites.
The surge in tourism, both from within India and abroad, has created a need for a variety of hotels, ranging from budget-friendly options to luxurious resorts. The government’s proactive promotion of tourism initiatives such as “Incredible India” and streamlining visa processes have made the country more appealing to travelers. Furthermore, the younger generation’s increasing enthusiasm for travel, combined with ongoing infrastructure improvements, bodes well for the continued growth of the hotel industry.
In terms of financial performance, the shares of Indian Hotels Company Limited are currently trading at Rs. 807.15, a slight decrease of 0.53% from their previous close of Rs. 811.45. The company’s shares have faced selling pressure throughout the year, resulting in an overall decline of nearly 8% year-to-date.
A recent update regarding profit booking reveals that HDFC Mutual Fund has reduced its shareholding in Indian Hotels Company Ltd. by 2.06% as of January 15, 2025. This decrease brings their total shareholding down to 2.98% of the paid-up equity share capital, equivalent to 1,42,34,32,227 equity shares of Rs. 1 each.
This significant selling activity appears to be a strategic profit-taking move by HDFC Mutual Fund. In the past, they held 5.037% of the company as of October 25, 2018, which equated to 1,18,92,58,445 equity shares. The decrease in their holding through open market sales suggests that the fund is capitalizing on gains following a period of substantial stock price appreciation.
The timing and magnitude of this sell-off, which amounted to over a 2% stake, may have contributed to the sharp decline in the company’s share price since the beginning of 2025. Institutional selling of this nature often exerts temporary downward pressure on stock prices, particularly when large blocks are sold in the open market.
Nevertheless, it is important to recognize that profit-taking actions by mutual funds are routine market activities and typically reflect portfolio adjustments rather than any fundamental concerns about the company.
Financial Analysis
Indian Hotels Co. Ltd. demonstrated robust financial performance in September 2024 compared to September 2023. Sales surged from ₹1,433 crore in September 2023 to ₹1,826 crore in September 2024, representing a revenue growth of 27.4%. EBITDA also experienced a substantial increase, rising from ₹355 crore in September 2023 to ₹501 crore in September 2024, accompanied by an enhancement in the operating profit margin (OPM) from 25% to 27%. These figures indicate improved operational efficiency and cost management.
The company’s net profit soared significantly, escalating from ₹179 crore in September 2023 to ₹583 crore in September 2024, marking a surge of over 225%. The impressive growth in both revenue and profitability underscores Indian Hotels Co. Ltd.’s robust financial position and effective business strategies.
The results for Q3 are scheduled to be disclosed today on January 17, 2024.
Future Plans
Indian Hotels Company has set ambitious expansion goals for the year 2030. The company plans to double its portfolio from 350 to over 700 hotels, with the number of operational hotels increasing from 232 to over 500. Financially, they anticipate a significant growth in enterprise revenue from ₹13,000 Cr to over ₹30,000 Cr, and consolidated revenue is expected to more than double from ₹7,000 Cr to over ₹15,000 Cr. The company also aims to improve its Return on Capital Employed (ROCE) from 15% to over 20% while maintaining a positive net cash position, which is currently at ₹2,000 Cr.
About the Company
Indian Hotels Company Limited (IHCL) is a leading hospitality brand in India, with a diverse portfolio that includes luxury, upscale, and midscale segments. IHCL operates in over 100 cities across 12 countries and four continents, with over 232 operational hotels and 24,000+ rooms as of September 2024. Some of the notable brands under IHCL’s umbrella include Taj, Vivanta, SeleQtions, and Ginger.
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.