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Indian Hotels stock soared as Q2 net profit surged 232% on-year to Rs 554.6 crore, driven by robust revenue growth, improved occupancy rates
IHCL Shares
Shares of Indian Hotels Company (IHCL) jumped over 4 percent as investors cheered the Tata Group company’s robust earnings for the quarter ended September 30, 2024.
Analysts said the quarter saw a strong rebound, driven by strong wedding-led demand in Mumbai, along with the release of pent-up demand that was delayed due to elections and weather disruptions in Q1.
IHCL’s Q2 revenue grew at 27 per cent, driven by healthy occupancy (77 per cent, up 3 per cent YoY) and strong ARR growth of 9 per cent YoY, resulting in RevPAR growth of 12 per cent YoY at the consolidated domestic level. Ebitda margin expanded 270 bps YoY to 27.5 per cent.
Add to that October saw strong growth of 16.5 per cent YoY (Hotel segment) and multiple wedding dates over the next two months should aid growth, Emkay Global said.
“Over the medium term, favorable demand-supply dynamics act as tailwinds for the business. IHCL’s diversified revenue stream, operational efficiency, and strong balance sheet keep the company in good stead. Our FY25-27E Ebitda gets a boost of 7-13 per cent from the consolidation of Taj SATS and factoring in the Q2 performance. We maintain ADD with a target price of Rs 700,” it said.
The stock climbed 4.15 per cent to hit a high of Rs 712 on BSE. With this, the scrip is up 10 per cent year-to-date.
Investec has maintained a ‘Hold rating on Indian Hotels, raising the target price from Rs 630 to Rs 742. They attribute the positive outlook to a well-rounded performance, supported by strong ARR growth and strategic expansions that leverage structural tailwinds.
Investec expects margins to sustain at 32 per cent to 32.5 per cent for FY26/27, with PAT projected to grow at a compound annual growth rate (CAGR) of 24 per cent from FY24 through FY27.
IHCL reported a 10.4 per cent YoY increase in average room rates (ARR) and an occupancy boost to 78 per cent, up by 150 basis points. Consolidated revenue rose, reflecting the impact of two months of Taj SATS consolidation.
Margins improved to 27.5 per cent, an increase of 270 basis points from the previous year. With H1 FY25 already achieving an 11 per cent YoY revenue growth, IHCL’s management is confident in delivering double-digit revenue growth for the full fiscal year.
In light of another strong guidance of 16 per cent-plus RevPAR growth in the hotel segment, analysts at Nuvama believe that IHCL’s LFL growth may be capped in early teens in FY25E, which is lower than our previous estimate.
LFL (like-for-like) refers to the hotels that were in operation during the entire period as well as during the corresponding period of the previous year.
“We have also been factoring in double-digit LFL growth each for FY26E and FY27E, which leaves little room to ratchet it up further,” the brokerage said as it revised revenue, EBITDA estimates downwards for FY25-27. Taking cognisance of the recent run-up, Nuvama downgraded IHCL to ‘Reduce’ from ‘Hold’ earlier with a revised SotP-based target price of Rs 574.
Over the past 12 months, the stock has soared 75 per cent, while Nifty rose 23 per cent during the same period.
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