Rakesh Jhunjhunwala portfolio: Experts optimistic on these two Tata stocks 


Two Tata Group companies have emerged as bull stocks going forward after quarterly earnings for March 31, 2022 (Q4FY22) period. These two stocks have already shrugged off the melancholy of the pandemic and outshined their counterparts on stock exchanges. They are Indian Hotels Company and Tata Communications.

Both the stocks are multi-baggers with strong gains in the past two years and experts continue to be optimistic about them further especially after their earnings for fourth and year ended period of FY22. 

With that, Rakesh Jhunjhunwala who is referred to as the ‘big bull of Dalal Street, will also reap the benefit of the gains arising from these stocks ahead.

Jhunjhunwala holds stakes in some major Tata Group stocks such as Indian Hotels, Tata Communications and Tata Motors.

Here’s what experts talk about Indian Hotels and Tata Communications.

Indian Hotels:

The company has announced its financial performance for the quarter ending March 2022. In Q4FY22, it reported a consolidated net profit of 71.57 crore against a net loss of 97.72 crore in Q4FY21. Revenue from operations stood at 872.08 crore against 615.02 crore in Q4FY21. On a sequential basis, Indian Hotels’ earnings were lackluster due to the Omicron wave.

Adhidev Chattopadhyay, Research Analyst at ICICI Securities said, “While Q4FY22 was an Omicron impacted quarter leading to 22% QoQ decline in IHCL’s consolidated revenue, we reiterate our BUY rating with a revised SoTP based target price of Rs292/share (earlier Rs285), valuing the stock on 22x Mar’24E EV/EBITDA.”

Chattopadhyay added, “We believe IHCL is well poised to benefit from the expected recovery in the hotel business cycle from H1FY23 (Apr’22) and are enthused by the company’s efforts to leverage its existing brand equity to focus on new business segments focus on cost optimisation, asset-light management contract model to expand room portfolio, and net cash balance sheet post Rs40bn of equity fundraise through a rights and QIP issue in H2FY22.”

However, the analyst also pointed out that fresh Covid waves globally and in India are the key risk to the rating as they could impact demand and rise in costs denting margins.

On Friday, Indian Hotels shares closed at 256.25 apiece up by 3.9% on BSE. The shares had raced towards their 52-week high of 260.30 apiece.

Taking into consideration the last closing price, Indian Hotels shares have emerged as multi-bagger as they climbed by more than 280% in the last two years defying the pandemic blues.

As of March 31, 2022, Jhunjhunwala holds 30,016,965 equity shares or 2.1% of the company. The investor added this Tata stock to his portfolio in June 2020.

Tata Communications:

Tata Communications delivers strong profits for the eight consecutive quarters. Consolidated PAT stood at 1,482 crore up by 18.5% yoy, while revenue was at 16,725 crore in FY22 rising by a nearly four-fold jump year-on-year.

Sanjesh Jain and Akash Kumar, Research Analysts at ICICI Securities said, “Tata Communications’ (TCom) Q4FY22 data business net revenue grew only 5% YoY (+0.7% QoQ) which is below expectations. This should be partially weak from orderbook of Q3; while orderbook funnel has sequentially improved, management commentary does indicate gradual recovery in revenue growth. TCom revenue growth faced headwinds from fewer feet on the street, delay in decision making and under-performance of usage-based services. It is hopeful of acceleration in revenue in FY23; showing willingness to invest both in capex and opex to drive growth implies huge commitment.”

“We would wait for early signs of an uptick in revenue. Data business EBITDA grew only 4.2% YoY (dipped 7.1% QoQ) on cost inflation including higher repair cost and reversal of covid benefits. We have cut our EPS estimates by 5-12% over FY23-24E, and accordingly, reduced our target price to Rs1,600 (from Rs1,680; 20x FY24E EPS). Maintain BUY,” the duo added.

Yesterday, Tata Communications shares closed at 1095.35 apiece up by 0.93% on BSE.

In the last two years, Tata Communications shares have emerged as the multi-bagger with gains of a whopping 365% on BSE. The shares have a 52-week high and low of 1,590 apiece and 1,036.30 apiece respectively.

Jhunjhunwala added Tata Communications to its portfolio in December 2020. As of March 31, 2022, the investor holds 3,075,687 equity shares or 1.1% in Tata Communications.

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