Royal Orchid Hotels hits new high; stock zooms 50% in 5 weeks

Nuvama Wealth and Investment remains confident of ROHL's ability to deliver a superior performance on favourable industry dynamics and elaborate expansion plans

Shares of Royal Orchid Hotels (ROHL) hit a new high of Rs 374, soaring 11 per cent on the BSE in Wednesday's intra-day trade, on strong business outlook. In the past five weeks, the stock has zoomed 50 per cent, and has bounced back 61 per cent from its April 3 low of Rs 232.20, hit on the BSE.

At 02:42 pm, ROHL was quoting 9 per cent higher at Rs 366.55, as compared to 0.11 per cent rise in the S&P BSE Sensex.

On Tuesday, ROHL announced that it is expanding its presence in Bengaluru with the Regenta brand. The hotel chain has recently unveiled the Regenta Inn Koramangala, a 25-key business hotel.

Analysts at Nuvama Wealth and Investment remain confident of ROHL's ability to deliver a superior performance on favourable industry dynamics and elaborate expansion plans.

The brokerage firm expects it to deliver a revenue/Ebitda CAGR of 45.9 per cent/75.3 per cent over FY22–25 on RevPAR growth and room additions. The company trades at a significant discount to its peers, which will narrow on improving brand recognition and its robust financial performance, analyst said. The brokerage firm maintains ‘buy’ rating on ROHL with a target price of Rs 433 per share.

Promoter Chander Baljee is still actively involved in the operations of ROHL. His son Keshav Baljee has already been inducted to the board of directors, smoothening the succession plan.

Meanwhile, on April 01, 2023, ROHL had informed the stock exchange that it had received an ‘Interim Order cum Show Cause Notice’ from Sebi dated March 31, 2023 against the company, promoters and chief financial officer.

This order is following a complaint received by Sebi against ROHL that, despite having control over Ksheer Sagar Developers Private Limited, it did not consolidate Ksheer Sagar as subsidiary but rather consolidated it as an associate (following appointment of 2 independent directors in FY2022), thus resulting in overstatement of consolidated profits for the FY2022 and consequent increase in share price.

Further, the complaint also alleges that the promoters sold 4.08 per cent stake between March 2022 and December 2022 gaining from share price increase.

The company is in the process of taking legal recourse to the order. The rating remains unchanged with a Stable outlook. ICRA will continue to monitor the developments in this regard and possible impact on the credit risk profile of the company, if any, and take an appropriate rating action as and when required, the rating agency said in rationale dated April 12, 2023.