Buy Indian Hotels; target of Rs 960: Motilal Oswal

Motilal Oswal's research report on Indian Hotels

Indian Hotels (IH) reported strong consolidated revenue growth of 29% YoY in 3QFY25, led by healthy RevPAR growth of 15% (ARR up 13% and OR up 120bp YoY) in its standalone business. Like-for-like hotel revenue growth stood at ~15% YoY, while TajSats grew by 18% YoY. The new and reimagined business reported 40% YoY growth. Management contract revenue rose 32% YoY to INR1.8b (including INR100m in brand and technical fees). IH upholds its double-digit revenue guidance, as healthy demand across key cities should help IH sustain higher OR and increase ARR. We expect IH to replicate a similar performance in 4QFY25, with revenue/EBITDA/adj. PAT likely to grow 31%/34%/26% YoY, aided by a strong wedding season (higher dates in 4Q YoY), an increase in FTA, and healthy traction in the MICE segment led by convention centers and favorable demand-supply dynamics. We broadly maintain our FY25/FY26 EBITDA estimates and reiterate BUY with our SoTP-based TP of INR960.

Outlook

We broadly maintain our FY25/FY26/FY27 EBITDA estimates and reiterate BUY with our SoTP-based TP of INR960.