₹2674 to ₹ 8,575 : This small-cap Tata group hotel stock surged over 220% in just one year

small-cap Tata group hotel stock

In the past year, among the 28 stocks in the Tata group, hotel stocks such as Indian Hotels Company (IHC) and Oriental Hotels have performed exceptionally well. The standout, however, is a small-cap stock within the Tata group's hospitality sector – Benares Hotels Ltd. 

With a market capitalization slightly over ₹500 crore, Benares Hotels has seen a remarkable increase in its share price, rising from ₹2674 to ₹8575 in the last year. This translates to a substantial 220% return for its investors, outperforming major Tata group stocks like Tata Consultancy Services (TCS), Tata Motors (TaMo), Titan Company, Tata Steel, Tata Communications, Tejas Networks, etc.

To put it simply, if an investor put ₹2.6 lakhs into Benares Hotels a year ago, the investment would now be worth ₹8.5 lakhs.

Benares Hotels

Overall, the stock has been in a significant upward trend in the past year.

Here are some key observations

• Strong growth: The stock price has risen from ₹3,379 on December 22, 2022, to ₹8,575 on December 22, 2023, an increase of over 150%.
• Sharp rise in recent months: The stock price has seen a particularly strong upward trend in the last few months, more than doubling since September 2023.
• Volatility: The price has also been volatile, with significant swings up and down, especially in the recent months.

Possible reasons for the uptrend

• Improving financials: The company's financial performance may have improved, leading to increased investor confidence.
• Positive industry outlook: The hospitality industry may be experiencing a recovery, which could benefit Benares Hotels Ltd.
• Increased investor interest: There may be increased investor interest in Indian stocks in general, leading to a rise in the price of Benares Hotels Ltd.

Technical indicators

• Moving averages: The 50-day and 200-day moving averages are both below the current price, which is a bullish signal.
• Relative Strength Index (RSI): The RSI is currently around 70, which is considered overbought territory. This suggests that the stock may be due for a correction.

Overall, the technical analysis suggests that Benares Hotels Ltd. is in a strong upward trend. However, the RSI suggests that the stock may be due for a correction.

 

Company Overview

Listed public limited company incorporated in 1971.

Operates hotels in Varanasi and Maharashtra.

Subsidiary of The Indian Hotels Company Limited (Taj Group).

Operates

Taj Ganges and Nadesar Palace in Varanasi (144 rooms and suites).

Ginger Hotel in Gondia (34 rooms).

Shareholding Pattern

As of June 30, 2023:

The Indian Hotels Company Limited: 74.14%

Public holding: 25.86%

Financial Performance (Last 5 Years)

Fiscal Year	Sales (INR Cr)	Net Profit (INR Cr)	Reserves (INR Cr)	Assets (INR Cr)	Debt (INR Cr)
2022-23	47.01	4.48	35.23	169.1	57.43
2021-22	35.37	2.23	30.75	160.35	65.68
2020-21	22.2	-0.23	28.52	160.62	74.46
2019-20	44.37	3.64	28.29	155.99	80.01
2018-19	49.36	5.73	24.65	150.19	83.27

Positive Signs

Strong brand association with Taj Group.

Recovery in tourism sector post-pandemic.

Improved profitability in recent years.

Strong financial position with low debt-to-equity ratio.

Negative Signs

Dependence on a single parent company for majority stake.

Limited geographic diversification.

Susceptibility to fluctuations in the tourism industry.

Higher debt levels compared to some peers.

DISCLAIMER: This article by Eivod is general in nature. We provide investment opinions, based on historical data and our articles are not intended to be investment advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis, driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.