TajGVK is making some waves today; the stock, which had closed at Rs.464.25, opened higher today at Rs.473.20 and went on to hit a new 52-week high at Rs.497.60, up 7.5%. In Feb alone, till date, it has gone up 41%.

No new material developments but just that its now on the radar of many analysts and funds houses.

The company is a JV between GVK Group and The Indian Hotels Company Limited (IHCL) wherein GVK Group holds 49.47% stake and IHCL holds 25.52% and balance 25% by public.

The stock is a part of “Little Gems” recommendation much before it was ‘discovered’ by the rest. The company posted a healthy Q3FY25. was up by 14% YoY to Rs. 127 cr, 40% EBITDA margin, consolidated PAT for owners up 34% YoY to Rs. 41 cr, including 48.99% share of JV operating the Taj Santacruz property. EPS stood at Rs. 6.6 for Q3FY25 and at Rs. 13.1 for 9MFY25, up 34% YoY, and very close to FY24’s EPS of Rs. 14.8.

Taj GVK runs 7 Taj properties in Hyderabad (Taj Krishna, Deccan, Banjara, Vivanta), Chennai (Taj Club House), Mumbai (Taj Santacruz), Chandigarh (Taj Chandigarh), aggregating 1,362 room keys and enjoying 11% room share in premium hospitality market of Hyderabad. It clocked 78% occupancy in FY24, with an average room rent up 20% YoY to Rs. 7,949.

Company is constructing a greenfield 253 key luxury hotel in North Bengaluru, near the airport, on 2.5 acre land, with Rs. 326 cr capex, expected to get operational by Mar 2026. Despite the large capex, it is net debt free, with surplus cash of Rs. 5 per share. With m cap of close to Rs. 2,415 cr, enterprise value per room (EV/key) is only at Rs. 1.76 cr, on the current capacity.

Mr.SP Tulsian’s opinion - H2 is seasonally stronger for hotel companies with Q4FY24 EPS for TajGVK was at close to Rs. 5. Thus, FY25E EPS can be estimated near Rs. 20, discounting the share price by a PE multiple of only 19.4x, on current year. 75% promoter holding, 23% net margin, 24% RoE, debt free balance sheet and optimistic outlook of the hospitality sector make Taj GVK a good buy.