Buy Indian Hotels; target of Rs 680: Motilal Oswal

Motilal Oswal's research report on Indian Hotels

Indian Hotels (IH) reported consolidated revenue growth of 17% YoY in 4QFY24, led by 19% YoY revenue growth in the standalone business. Growth in the standalone business was driven by better occupancy (up 440bp YoY) and ARR (up 4% YoY; LFL 8% excluding Ginger Santacruz). Standalone management contract revenue rose 32% YoY to INR1.5b.

Outlook

We expect the strong momentum to continue in FY25, led by: 1) an increase in ARR due to healthy demand, asset management strategy (upgrades in hotels), and corporate rate hikes; 2) sustaining higher occupancy levels led by favorable demand-supply dynamics; 3) strong room addition pipeline till FY28 in both owned/leased (2,779 rooms) and management hotels (10,174); 4) higher income from management contracts; and 5) value unlocking by scaling up reimagined and new brands. We broadly maintain our FY25/FY26 EBITDA estimates and reiterate BUY with our SoTP-based TP of INR 680.