Strong Q4; Double digit growth to sustain in FY27
About the stock: Indian Hotels Company (IHCL) and its subsidiaries bring together a group of brands and businesses that offer fusion of warm Indian hospitality and world class services. It has 361 operational hotels and 256 hotels under development.
Q4FY26 performance: IHCL consolidated revenues grew by 14% YoY to Rs.2,765.3cr driven by ~12.5% YoY growth in the standalone business and ~16% YoY growth in the subsidiaries business. Standalone growth was boosted by 12% RevPar growth. Consolidated EBITDA margins stood almost flat at 35.2%. Operating EBIDTA grew by 13.5% YoY to Rs972.7cr. This along with higher other income and flat interest cost led to ~15% YoY growth in the adjusted PAT to Rs645.4cr.
Investment Rationale:
• Revenues to grow by 12-14%; Same-store Revpar to grow by 7-9%: Despite subdued business in the month Mar’26, IHCL’s consolidated revenues grew by 14% YoY to Rs2,765cr in Q4FY26, driven by strong performance during the period of Jan-Feb,26. Standalone RevPar growth stood at 12% in Q4 better than 7% in Q3FY26. Its consolidated revenues grew by 16% YoY to Rs9,689.2cr in FY26 driven by 12% growth in the hotel business and 16% growth in the air catering business. Management expects consolidated revenues to grow by 12-14% in FY27 with same- store-Revpar growth of 7-9%, while new room addition, incremental revenues from renovated rooms and recent acquisition will add another 4- 5% to overall growth in FY27. Resilient domestic demand and strong wedding demand with 70 auspicious days will help to drive high single digit RevPAR in the domestic business. If global uncertainties recede, management expects revenue growth to improve to 15%+ in H2FY27. Newly acquired Brij and Atmantan resorts are expected to contribute Rs250+cr to the topline in FY27.
• Strong balance sheet; efficient asset management under prudent capital allocation: IHCL’s capital light strategy is a key competitive advantage over other branded hotel companies with 68% of operating portfolio and 93% of pipeline is under managed or asset light formats. This enables the company to do disciplined expansion with higher returns and consistent growth in the cash flows. As of 31st march, 2026, IHCL had Rs4,300cr of cash on its books, which it can utilise to pursue organic and inorganic growth opportunities. Asset management remains key focus area and the company has invested Rs2,500cr over the past three years to strengthen its iconic assets and enhance strategic capabilities. The company is planning to spend Rs1000-1200cr on capex in FY27, which will utilised for renovation of rooms and build new hotels. Further the company has also invested Rs500cr across four strategic acquisitions, expanding presence into high growth adjacencies and strengthening future revenue streams. Also under the prudent capital allocation plan, the company has rewarded shareholders with 25% dividend payout in FY26. The company is well prepared and has strength in terms of strong balance sheet to sail through any tough times in the coming years.
Rating and Target Price:
We recommend Buy with a revised price target of Rs.865 valuing at 29x its FY28E EV/EBIDTA.
