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Indian Hotels Company (IHCL) delivered in-line consolidated revenue, aided by standalone occupancy of 75.9% (vs. 69.8% in Q2FY23) and ARR/RevPAR growth of 18% YoY/28% YoY, though consol. margin disappointed. IHCL’s growth outlook on H2 remains robust, with business on books staying strong and Ginger RevPar expected to grow over 20% YoY. We like IHCL’s diversified topline, operational efficiency and debt-free balance sheet. IHCL has a pipeline of 82 hotels, and is set to add ~11k rooms (~8.8k room-adds over FY24-26E). This will aid consol. revenue/EBITDA CAGR of 13%/16% over FY23-26E, amid margin expansion. We have cut consol. EBITDA by 4%/7% for FY25E/FY26E, as we reduce margin expectation due to the margin miss. We maintain BUY on IHCL, with TP of Rs455/sh (Rs485 earlier), ascribing 23x Sep-25E EV/EBITDA

Q2 performance broadly in-line; Standalone RevPAR up 28%YoY

Consol. revenue was broadly in-line (16% YoY growth), while margins were lower (up 90bps YoY; a 90bps miss on our estimate). Standalone occupancy was 75.9% (vs. 69.8% in Q2FY23) and ARR was up 18% YoY, with the IHCL delivering RevPAR growth of 28% YoY and revenue growth of 19% YoY (a 3% beat on our est.). International business EBITDA is down ~28% YoY, with margin of 8.4% (vs. 12.5% in Q2FY23) due to challenges in San Francisco and New York. IHCL’s air catering business TajSATS clocked revenue growth of 48% YoY, while the management fee income grew 14% YoY. Ginger ARR was up only 1%YoY in Q2, though occupancy improved by 7pps YoY to 65%. Higher ARR in SeleQtions (15% YoY) led to a dip in occupancy (-2pps YoY).

H2 performance to be robust; Ginger ARR to improve at fast pace

IHCL expects robust demand from the structural shift in consumers’ behavioral mindset. H2 performance would improve, with double-digit YoY growth in Q3 RevPaR, as: i) October has been considerably strong; ii) business on the books is quite strong; and iii) foreign tourist arrival expected to pick-up. Ginger ARR would improve at a fast pace post renovation of rooms, leading to RevPar growing at over 20% YoY (14% YoY in Q2). TajSATS has levers for growth with increase in number of airports/flights and increase in non-aviation revenue for TajSATS. Investments by company will be India-centric.

FY23-26E EBITDA CAGR to clock at 16%; BUY

Company continues to focus on diversification of topline with new brands. Renovation will help in mid- & long-term revenue growth. Robust demand will aid RevPAR CAGR of 10% and consol. revenue/EBITDA CAGR of 13%/16% over FY23-26E, amid margin expansion. We have cut our consol. EBITDA by 1%/4%/7% for FY24E/FY25E/FY26E, as we reduce margin expectation amid the margin miss. We maintain BUY on the stock, with TP of Rs455/share (Rs485 earlier), ascribing 23x Sep-25E EV/EBITDA.

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