Nomura maintains buy on IHCL, cuts target price to Rs 800 amid geopolitical uncertainty

markets

• Nomura keeps buy rating on IHCL, lowers target price to Rs 800
• IHCL shares dropped 21% in six months, lagging behind Nifty.
• Nomura expects EBITDA growth of 13-14 percent CAGR FY26-FY28

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Brokerage firm Nomura has maintained its buy rating on Indian Hotels Company Ltd (IHCL) while lowering its target price to Rs 800 from Rs 830, implying an upside of 28.6 percent from the current market price. The brokerage has also trimmed its FY27 and FY28 earnings estimates by 3 percent each, citing volatility arising from geopolitical tensions, particularly the Middle East conflict.

IHCL’s share price has declined 21 percent over the past six months, underperforming the Nifty 50, which fell 8 percent during the same period. Nomura said the correction reflects heightened uncertainty, though it expects limited impact on near-term performance. For the fourth quarter of FY26, the brokerage estimates EBITDA growth of 11 percent year-on-year, lower than its earlier estimate of 13 percent and about 3 percent below consensus.

Management indicated that bookings in January and February remained strong, supported by events such as the ICC World Cup in Mumbai and an AI summit in Delhi. While some cancellations were observed in March, the overall impact on the quarter is expected to be limited. For the standalone business, Nomura expects average daily rate growth of 4 percent quarter-on-quarter and 8 percent year-on-year in the fourth quarter, with flat occupancy leading to mid- to high single-digit growth in revenue per available room.

Nomura noted that IHCL’s management fee income could see some impact due to its exposure to three hotels in Dubai under management contracts. However, with around 200 hotels under management contracts, the brokerage expects moderate growth in management fees compared with earlier high-teen expectations. It estimates consolidated revenue and EBITDA growth of 11 percent and 12 percent year-on-year, respectively, for the fourth quarter, with revenue, EBITDA and net profit projections falling 2 percent, 3 percent and 7 percent below consensus.

Assuming conditions stabilise over the next two to three months, Nomura expects EBITDA to grow at a compound annual rate of 13 percent to 14 percent over FY26 to FY28, slightly lower than its earlier estimate of 14 percent to 15 percent. The brokerage has also reduced its FY27 revenue per available room growth estimate to 7 percent from 8 percent, factoring in geopolitical disruptions.

However, it expects some offset from a low base in FY27 due to disruptions in FY26. Additional growth drivers include new acquisitions contributing around 200 to 300 basis points to revenue and incremental room additions in properties such as Taj Frankfurt, Varanasi and Ekta Nagar. Management fee income is expected to grow in the mid- to high teens, supported by new unit additions.

Nomura maintained its FY28 revenue per available room growth estimate at 9 percent, citing continued strength in the luxury segment and corporate travel demand, with operating leverage and higher management fee contribution expected to support margins over the medium term.