Oriental Hotel (OHL) operates in South India with Indian Hotels Co Limited (IHCL) being one of the promoter entities. The company owns and operates 7 hotels with ~825 rooms across business & leisure locations south. It derives majority of the revenues from two of its properties in Chennai 1) Taj Coromandel 2) Taj – Fisherman’s Cove.
Tata Group companies hold ~39.1% stake in OHL and the company is an associate of IHCL (28.6% stake). Apart from the ownership, the company has strong operational and financial linkage with IHCL
On a replacement basis, the stock is trading at EV/room of ~₹1.6 crore which is still at ~40% discount to current replacement costs.
We remain positive on the company and maintain our BUY rating
We value co. at ₹80 i.e.21x FY24E EV/EBITDA or ₹2.0 crore EV/room (Vs. earlier TP ₹73/share)
Apart from Oriental hotels, we also like TajGVK Hotels.
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