Indian Hotels Co Downgraded to 'Hold' by MarketsMOJO, Despite Positive Growth and Financial Indicators

Indian Hotels Co, a largecap company in the hotel industry, has recently been downgraded to a 'Hold' by MarketsMOJO on March 1, 2024. This decision was based on various factors, including the company's healthy long-term growth with an annual operating profit growth rate of 30.34%. Additionally, the company declared very positive results in December 2023 with a 173.9% growth in net profit. It has also consistently shown positive results for the last 9 quarters. The company's financial indicators also show positive signs, with the highest ROCE (HY) at 15.00%, and the highest operating profit to interest (Q) at 13.78 times. Its debt-equity ratio (HY) is also the lowest at 0.33 times. Technically, the stock is in a mildly bullish range, with multiple factors such as MACD, Bollinger Band, and KST indicating a bullish trend. Indian Hotels Co also has a high institutional holding of 45.62%, indicating that these investors have better resources and capabilities to analyze the company's fundamentals. The stock has consistently outperformed BSE 500 in the last 3 annual periods, with a return of 87.20% in the last year alone. With a market cap of Rs 83,378 crore, it is the largest company in the hotel industry, constituting 46.53% of the entire sector. Its annual sales of Rs 6,488.84 crore make up 33.34% of the industry. However, the company's ability to service its debt is weak, with a poor EBIT to interest (avg) ratio of 1.74. Its long-term growth has also been poor, with an annual net sales growth rate of 8.02% over the last 5 years. The return on equity (avg) is also low at 5.40%, indicating low profitability per unit of shareholders' funds. With an ROCE of 15.3, the company's valuation is considered very expensive, with an enterprise value to capital employed ratio of 8.9. However, the stock is currently trading at a discount compared to its average historical valuations. In conclusion, while Indian Hotels Co has shown positive growth and financial indicators, there are also some concerns regarding its ability to service debt and long-term growth. Investors are advised to hold the stock and monitor its performance closely.