Tata Group Stocks: Biggest Gainers of 2022

Several Tata Group entities delivered multibagger gains in 2021 but failed to repeat the feat in 2022.

Of the 24 publicly traded firms, around 15 posted negative returns for the year.

Among the underperformers were marquee companies such as Tata Steel, Tata Consultancy Services, and Tata Motors, all of which are down 5-10% year to date. These companies gave a return of 30-163% in 2021.

Global macroeconomic issues, geopolitical tensions, soaring inflation, and central banks tightening monetary policy, roiled market confidence in 2022.

The impact of these issues on business profitability made the risk-reward in this pack unfavourable and led to selling.

However, there were outliers in the group that managed to provide strong returns.

Here are the top 5 outliers of the group.

#1 Oriental Hotels

The first stock on the list is Oriental Hotels.

The Indian Hotels Associate Oriental Hotels' shares rallied 87% in 2022.

The surge in the stock was on the back of improved demand stemming from business travel, transient passengers, and leisure travel. Further, MICE (Meetings, Incentives, Conferences, and Exhibitions) events, both weddings and corporate, fueled the rally.

Tata Group companies own over 39% stake in the company with the family members of late Chennai-based industrialist DS Reddy.

The company owns seven hotels under the Taj, Selections, Vivanta, and Gateway brands. While the hotels are spread across six south Indian cities, two of the flagship properties are Taj Coromandel and Taj Fisherman's Cove.

Over the last five years, the company's sales and net profits have shown a de-growth of 9.3% and 215.9%, respectively.

This downfall was due to the impact of the pandemic on the hotel industry. Oriental Hotels reported a loss for the financial years 2021 and 2022.

However, the company's numbers have improved since the lockdown restrictions have been removed. The company reported a consolidated net profit of Rs 80.5 m, in the September 2022 quarter, up against a net loss of Rs 70.5 m in the year-ago period.

Its revenue stood at Rs 888 m, 69.6% YoY higher than Rs 523.4 m in the year-ago period, benefitting from improved operating leverage and sustenance of cost optimisation measures undertaken by the company.

The company has total capex plans of around Rs 650 m for the second half of the financial year 2023 to the financial year 2025. This is likely to be funded through internal accruals.

For more details, see the Oriental Hotels company fact sheet and quarterly results.

#2 Indian Hotels Company

Second on the list is the Indian Hotels Company.

The stock rallied over 75% in 2022 on the back of firm demand in the leisure segment and a boost from increased business travel.

Despite a rise in interest rates by various banks, big hotels such as Indian Hotels have not seen a drop in revenue.

It is one of South Asia's oldest and largest hospitality chains and is home to the iconic Taj brand.

With a strong heritage and rich legacy, IHCL has maintained a leadership position in the global landscape of luxury hospitality over the past century.

Over the last five years, the company's sales and net profits have shown a de-growth of 5.7% and 228.6%, respectively, due to the pandemic.

The company for September 2022 quarter clocked a revenue of Rs 12.3 bn, up 69.2% YoY, and a net profit of Rs 1.3 bn against the net loss of Rs 1.1 bn a year ago.

The strong performance was driven by the domestic market, which clocked an over 20% growth rate over pre-Covid levels in key cities, and its properties in the US, UK, Dubai, and Maldives also registered a strong recovery.

Taking the vision forward, IHCL unveiled Ahvaan 2025 with plans to build a profitable cohort of 300 hotels leveraging its strong brand equity aligned with high-growth segments.

The target is to reach a 35% EBITDA (earnings before interest, depreciation and amortisation) share contribution from new businesses and management fees by the financial year 2025-2026.

Going forward, Ama Stays and Trails, one of the company's previous initiatives, looks to expand to 500 properties by the financial year 2025-26.

It is one of several business engines that the company has been pushing for growth. By providing a platform for house owners to open up their homes to travelers, Ama offers an opportunity to monetise an idle asset and convert it into a profit-making business managed by Indian Hotels.

To know more about the company, check out its factsheet and quarterly results.

#3 Tata Investment Corporation.

Third on the list is Tata Investment Corporation.

The company's shares surged 56% in 2022 on the back of its robust revenue from the higher dividend income, interest, and profit on the sale of investments.

The company is engaged in the business of investment in listed and unlisted equity shares, debt instruments, and mutual funds companies in a wide range of industries.

It invests in a portfolio of quoted and unquoted securities of companies, including Tata Companies.

The company also invests in units of mutual funds, bonds, and venture capital funds.

The major sources of income of the company consist of dividends, interest, and profit on the sale of investments.

Over the last five years, the company's sales and net profits have shown a de-growth of 3.9 and 0.2%, respectively, due to volatile market conditions.

The company for September 2022 quarter clocked a revenue of Rs 1.1 bn, up 20.2% YoY, while the net profit registered a 6% YoY rise to Rs 1.1 bn.

This rise was on the back of higher realisation, further aided by expectations of milder interest rate hikes which led to an excellent rally even in the NBFC space.

The company is looking forward to increasing the quality of investment to drive the company's profit higher.

To know more about the company, check out Tata Investments factsheet and quarterly results.

#4 Benares Hotels

Fourth on the list is Benares Hotels.

The lesser-known company of Tata Group rallied 50% in 2022 on the back of a boost from increased business travel and festive season revenue.

Benares Hotels is an India-based company. The company's business consists of hotel operations.

Benares Hotels is a subsidiary of The Indian Hotels Company. It includes Taj Ganges and Taj Nadesar Palace in Varanasi as well as The Gateway Hotel in Gondia, Maharashtra.

Over the last five years, the company's sales remained flat while net profit showed a de-growth of 2.7%. These muted results were due to the Covid-19 impact on the hotel industry.

But the company bounced back, with tourists starting to travel again in full swing.

The company for the September 2022 quarter clocked a revenue of Rs 177.2 m, up 67.1% YoY, while the net profit registered a 518.7% YoY rise to Rs 29.7 m from Rs 4.8 m a year ago.

This was in line with its parent company's earnings. The profit growth was driven by the strong demand in Indian markets with the festive season boosts, and business travel and higher realization due to premium charges.

It is a virtually debt-free company. It has been maintaining an effective average operating margin of 23.28% in the last five years.

Benares Hotels is looking forward to expanding its properties with low to no debt.

For more details, see the Benares Hotel company fact sheet and quarterly results.

#5 Tejas Networks

Last on the list stands Tejas Network.

This Tata group-backed companies zoomed 38% in 2022.

In its annual report for 2021-22, the company has highlighted that post 5G spectrum auctions, it is planning a multi-year capex cycle for building both wireline and wireless infrastructure. This has to be the prime factor behind Tejas Networks' stellar rally.

Apart from Tatas, Bharti Airtel has also chosen Tejas Networks to expand its optical network capacity in key metropolitan markets. The company is virtually debt free.

Tejas Networks is among the earliest telecom product companies that have built homegrown technology products in networking and optical backhaul crucial for high-speed broadband. It is among the top 5G stocks in India and has a presence in global markets as well.

Over the last five years, the company's sales and net profits have shown a de-growth of 6.4% and 190%, respectively, due to the consecutive losses reported by the company.

Tejas Networks reported a 27.3% YoY increase in revenue for the September 2022 quarter. Due to the increase in revenue, the company's operating profit rose over 17% YoY.

However, as expenses increased, the company reported an over 70% YoY decline in net profit. Margins also fell.

It witnessed strong order bookings driven by multiple wins for its optical products.

The firm has already confirmed to invest Rs 7.5 bn under the design-led Production Linked Incentive (PLI) scheme for the manufacturing of telecom and networking products.

For more details, see the Tejas Networks company fact sheet and quarterly results.

Tata Group: Path Ahead

The Tata Group has the second-largest market capitalization in the Indian stock market. It has become a common name in India for everything from cars to salt.

The combined revenue of Tata firms in 2021-2022 was US$128 billion (bn), or approximately Rs 9.6 trillion (tn). It is the biggest manufacturer of electric vehicles, trucks, and software in the nation. It is also one of the biggest manufacturers of steel, tea, automobiles, and producer of electricity.

Given the pace at which it is expanding, this multinational enterprise has firmly entrenched itself with the with the Indian people for more than 150 years and is not likely to relinquish that position any time soon.

The Tata Group has big goals for its upcoming stage of development.

With a renewed emphasis on India, the group is planning to devote over 80% of its capital expenditures to local businesses over the next five years, with an expected investment of US$ 90 bn.

It includes Tata Power's plan to spend over US$ 10 bn over the next five years in renewable energy, a US$ 5 bn project to build Giga factories and its bets in tech and electronics.

The group intends to make 5G telecom gear and is also beefing up its play in the semiconductor space.

Two more group companies, Tata Play and Tata Technologies, will go public in 2023.

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