EV / EBIDTA is indeed currently the most fashionable valuation metric – not just for hotels but I think across majority of the sectors.
I tried to look up how brokerage houses are valuing IHCL. Geojit Paribas has used a valuation of 22 X FY25E EV / EBIDTA. HDFC Sec assigns a multiple of 22 X EV / EBIDTA. Axis Securities gives a value of 38 X FY26E PAT. I-Sec does slightly better, as it gives 23 X FY25E EV / EBIDTA and also does some adjustments for cash, minority interest etc. and then adds values of Taj GVK & Oriental Hotels (but not others), doing a SOTP valuation. Motilal Oswal gives a value of 25 X EV / EBIDTA and does the same SOTP as I-Sec but also includes Taj Sats. Ventura Securities assigns a flat P/E of 46 X to FY25 PAT.
Traditionally, hotel stocks used to be valued on asset value basis. You could count how many rooms it has, assign a value of X per room, calculate the value of the hotel and then adjust it for other factors like debt on the balance sheet. Or based on benchmarks set during comparable buyout / M & A deals. But given that a significant share of revenues now a days come from management contracts, this too doesn’t seem appropriate now.
I am not a fan of EV / EBIDTA, but I don’t have an alternative either, especially for a complicated business like IHCL. Perhaps a better (and lazier) option is to ride the uptrend so long as it lasts, and exit based on technical analysis.
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