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Royal Orchid Hotels: Why This Stock Is a Buy Now

Royal Orchid Hotels Limited (ROHL) is a leading hotel chain in India with a presence in 25 cities. The company’s stock has been underperforming in recent months, but we believe that there are several reasons why investors should consider buying ROHL stock now. Here we have royal orchid hotels news for you.

Reasons to buy ROHL stock

  • Strong demand-supply dynamics: The hotel industry is upcycling and demand is expected to remain strong over the next few years. Supply is expected to lag behind demand, which will lead to higher average room rates (ARRs). This will boost revenues and profitability for hotel companies like ROHL.
  • Aggressive room addition plans: ROHL plans to increase its room count by about 50% over the next two years, with a target of about 8,000 rooms by FY25. The company is adding rooms via the asset-light management contract route and revenue sharing/lease agreements. This will help ROHL to tap into the growing demand for hotel rooms.
  • Experienced leadership: ROHL recently inducted Philip Logan as Chief Operating Officer. Philip has 30 years of experience in the hospitality industry and will be instrumental in taking ROHL to the next growth level.
  • Healthy balance sheet: ROHL’s debt:equity ratio is well below the 1x mark. This means that the company has a healthy balance sheet and is not overleveraged.
  • Attractive valuation: ROHL is currently trading at an EV/EBITDA of 9 times FY25 projected numbers. This is a steep discount compared to its listed peer Lemon Tree Hotels. Also, ROHL’s valuation is at a discount to its own historical average of about 13x.

Conclusion

ROHL is a well-positioned company with a strong growth strategy. The company is benefiting from favorable demand-supply dynamics and has aggressive room addition plans. ROHL is also led by an experienced team and has a healthy balance sheet. We believe that ROHL is a good stock to buy at current levels.

Disclaimer:

This is not investment advice. Please consult with your financial advisor before making any investment decisions.

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