In the latest analysis from Motilal Oswal Financial Services Ltd, two standout stocks have emerged as prime investment opportunities for the week commencing April 14, 2025. These stocks are Indian Hotels Company Limited (IHCL) and Hindustan Petroleum Corporation Limited (HPCL). Lets delve deeper into what makes these stocks appealing to investors.

Stock Overview

Stock Name Current Market Price (CMP) (Rs) Target Price (Rs) Upside Potential (%)
Indian Hotels 788 950 21%
HPCL 382 455 19%

Indian Hotels: A Strong Contender

Indian Hotels has been demonstrating remarkable growth, largely attributed to its swift adoption of an asset-light strategy. This strategic pivot has resulted in robust EBITDA margins ranging from 70% to 75%, enabling the company to achieve a compound annual growth rate (CAGR) of 18% in management contract rooms from fiscal year 2019 to 2024. This rate starkly contrasts with the mere 2% growth seen in owned hotels. Notably, IHCL is projected to account for approximately 85% of planned room additions in fiscal years 2026 and 2027.

Moreover, Roots Corporation Limited (RCL), which has repositioned itself as a lean luxury brand, achieved impressive figures, with revenue and EBITDA CAGRs of 13% and 55%, respectively, from FY19 to FY24. IHCL has ambitious plans to integrate 874 Ginger rooms by FY27, alongside its Qmin initiative, which will further enhance its managed hotel portfolio, sustaining growth in a competitive market. Anticipated new growth segments, such as Chambers and Taj Sats, are projected to contribute significantly to IHCLs total revenue, expected to rise from 2% currently to between 12% and 14% by FY30. With plans to add a staggering 8,091 rooms by FY27, reaching a total of 34,521 keys, IHCL is poised to solidify its status as Indias largest hospitality player, targeting approximately 65% of the luxury room market.

HPCL: Positioned for Growth

On the other hand, Hindustan Petroleum Corporation Limited (HPCL) stands to benefit from a decline in oil prices, driven by an increase in output from OPEC+ and adjustments to US tariffs. This favorable market condition is expected to enhance HPCLs gross marketing margins. Furthermore, the recent 50 price hike imposed by the Indian government is anticipated to help mitigate the 76 billion in LPG under-recoveries that HPCL faces.

Key triggers for HPCL's growth include the anticipated demerger and potential listing of its lubricant business, the commissioning of the bottom upgrade unit expected in the fourth quarter of FY25, and the launch of a new refinery in Rajasthan slated for calendar year 2025. For the fourth quarter of FY25, analysts predict refining throughput to reach 6.6 million metric tons, reflecting a 14% year-on-year increase, while marketing sales volume is expected to rise to 12.5 million metric tons, marking a 1% increase year-on-year. The expected Gross Refining Margin (GRM) is projected at USD 5.5 per barrel, with a gross marketing margin forecasted at 4.6 per liter. With a projected return on equity (RoE) of 17% for FY26, current valuations of HPCL are considered attractive to investors.

Disclaimer: The opinions, analyses, and recommendations expressed in this article reflect the views of the brokerage firm and do not represent the views of The Times of India. It is always prudent to consult with a qualified investment advisor or financial planner before making any investment decisions.