Indian Hotel shares fall 3% despite strong Q3 earnings; Jefferies maintains 'buy'

IHCL's 1-year returns are a massive 76 percent, outpacing Nifty's gain of 9 percent over the same duration.

Shares of The Indian Hotels Company (IHCL) slipped 3 percent to Rs 789 in morning trade on January 20 despite posting a net profit of Rs 582.32 crore for the October-December quarter of FY25, reflecting a 29 percent increase compared to Rs 451.95 crore reported in the same period last year. Revenue from operations also surged by nearly 29 percent, reaching Rs 2,533.05 crore in Q3 FY25.

The results, shared in an exchange filing after market hours on January 17, highlighted strong quarterly performance. The period's earnings per share (EPS) came in at Rs 4.09. Total income increased robustly, climbing over 29 percent to Rs 2,591.73 crore from Rs 2,003.64 crore reported in Q3 FY24. Meanwhile, EBITDA for the quarter rose 27 percent year-on-year to Rs 2,081 crore.

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Following this, Jefferies maintained a "Buy" rating on the stock with a target price of Rs 1,000, implying an upside potential of 22.5 percent from the last close on the NSE and citing a strong performance and demand outlook. The company’s EBITDA was in line with estimates, with a slight beat versus consensus. The guidance indicates sustained demand buoyancy for Q4 FY25 and FY26, driven by large-scale events, regional weddings, and transient travel. Additionally, Taj Sats revenue increased 18 percent year-on-year, and new business revenue surged 40 percent.

Puneet Chhatwal, Managing Director and CEO of IHCL noted, “Q3 marks the eleventh consecutive quarter of record performance, with the hotel segment achieving a strong 16 percent revenue growth and an EBITDA margin of 40.9 percent. This growth was fueled by a 40 percent increase in new businesses, double-digit growth in same-store hotels, and a 20 percent revenue jump in the US portfolio. Consolidation of air and institutional catering further boosted revenue and PAT by 29 percent to Rs 2,592 crore and Rs 582 crore, respectively.”

Chhatwal also expressed optimism about the future, highlighting demand drivers like large-scale regional events, weddings, and steady transient travel. He added that IHCL is on track to reach its target of 700 hotels by 2030.

At about 9:45 am, shares of the company were trading at Rs 790, lower by 2.7 percent from the last close on the NSE. IHCL's 1-year returns are a massive 76 percent, outpacing Nifty's gain of 9 percent over the same duration.

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