Buy Indian Hotels Company Ltd For Target Rs. 835 by Axis Securities Ltd
Resilient Growth Amid Global Volatility
Est. Vs. Actual for Q1FY26: Revenue: INLINE; EBITDA: MISS; PAT: MISS.
Recommendation Rationale:
• Standalone Domestic Business shows Encouraging Growth: The standalone domestic business reported a growth of 12.2% YoY. Standalone ARR (Average Room Rate) increased to Rs 14,552 (+12.3% YoY), with occupancy reaching 74.3%, a decline of 90 bps YoY. This resulted in standalone RevPAR growth of 10.9% YoY. Management Fees grew by 16.7% YoY and stood at 133 Cr.
• Momentum in International Business: On a consolidated basis, the international business contributed 19% to revenue. Key legal entities such as UOH Inc (USA), St. James (UK), and PIEM Hotels reported revenues of Rs 236 Cr/ Rs 163 Cr / Rs 140 Cr, respectively, with improving EBITDA margins on an annual basis. UOH reported EBITDA of 7.8% vs. 4.8% last year. PIEM expanded its margins by 250 bps, while St. James contracted by 100 bps. International RevPAR stood at $371, up 13% YoY.
• Taj Sats Contributing Rs 288 Cr with 23% Margins: A change in the airport levy method positively impacted revenue but adversely affected margins by about 200–300 bps.Planned capex of Rs 1,200 Cr in FY26 for asset buildouts, renovations, expansions, and digital initiatives. Long-term capex guidance stood unchanged at Rs 5,000 Cr over 4-5 years.
Sector Outlook: Positive
Company Outlook & Guidance: IHTL’s outlook remains strong, driven by sustained demand and strategic growth initiatives. New businesses like Ginger and Qmin are expected to enhance revenue diversification and brand reach. The expansion of inventory across diverse key urban markets supports this strategy, while Qmin continues to scale through cloud kitchens and institutional catering. International operations, especially in the U.S. and U.K., are expected to remain resilient. While cost pressures and geopolitical risks may persist, IHTL remains confident in sustaining performance through operational efficiency, premium pricing, and a growing asset-light portfolio. Management maintains its double-digit growth in revenue while maintaining stability in margins
Current Valuation: EV/EBITDA 31x for FY27E earnings.
Current TP: Rs 835/share (Earlier TP: Rs 900/share)
Recommendation: BUY Financial Performance:
Indian Hotels (IHTL) reported strong results that were not in line with our expectations, with consolidated revenue/EBITDA growth of 31.7%/28.2% YoY. In Q1FY26, this growth was driven by strong domestic demand, a favourable supply-demand mismatch, and healthy momentum in MICE and leisure travel. The acquisition of Ginger Kolkata further strengthened IHTL’s mid-scale portfolio. However, the quarter also faced several headwinds: Operation Sindoor led to operational strain, booking cancellations in certain markets impacted revenue visibility, and geopolitical conflicts and flight disruptions created volatility in international travel corridors. A portion of the growth came from newly added properties, distorting like-for-like comparisons.
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SEBI Registration number is INZ000161633
