Quant-Funda : Buy between Rs. 825-840 Indian Hotels Company Ltd For Target Rs.985 - Geojit Investments Ltd
Fundamental View
Indian Hotels Company Ltd (IHCL), the Tata group's hospitality arm, operates 390 hotels within a 670-property portfolio across Taj, SeleQtions, Vivanta, Ginger and Tree of Life.
* Q2FY27 consolidated revenue rose 22% YoY to Rs.2,484cr, EBITDA 24% to Rs.706cr and PAT 19% to Rs.380cr, with EBITDA margin up 50bps to 28.4%. RevPAR rose 28% to Rs.13,860 on a 700bps occupancy gain to 82% and 17% ADR growth.
* Management expects FY27 revenue to grow 15–17%, up from 12–14%, with hotels alone at 17–19%. H2 carries 30 of the 50 planned openings, plus major corporate events and ~40 auspicious wedding dates. Ginger, the first Indian brand past 100 hotels, grew 24% to Rs.193cr at a 40% margin and targets 150 by March 2027.
* Management fees grew 25% YoY to Rs.156cr, and management expects them to cross Rs.1,000cr in two years — about a 27% CAGR, with revised fee guidance due by endQ3FY27. 94% of the 34,800-key pipeline is capital-light, supporting both margins and return on capital.
* TajSATS (airline catering) and overseas hotels were the drag, though London is profitable and grew double-digit in October. CARE and ICRA raised IHCL to AAA from AA+, and the Oriental Hotels merger adds 6–7% to standalone revenue from FY28.
* As per market consensus, stock trades at 28x FY28E EV/EBITDA, with PAT growing 24% in FY27E and 18% in FY28E. A recovery in TajSATS and the overseas portfolio could serve as a trigger.
Technical View
* Indian Hotels has completed a weekly descending channel breakout followed by a weekly accumulation breakout on strong volumes, and trades above the 20, 100 and 200-DMAs at Rs.731, Rs.720 and Rs.689.
* The post-result advance carried price to a fresh 52-week high of Rs.795, clearing the Rs.776 ceiling that had capped the stock all year, with volume at 1.5x the ten-day average.
* RSI and MACD are both strong and bullish and the counter's liquidity is ample, leaving the channel's measured objective at Rs.985.
* The Rs.825–840 band offers an entry on a breakout retest, with the old Rs.776 high as support, a stop-loss at Rs.739 and a target of Rs.985.
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