Buy Indian Hotel; target of Rs 880: Motilal Oswal

Motilal Oswal's research report on Indian Hotel

Indian Hotels (IH) has emerged as a compelling growth story in the Indian hospitality sector following its transformative journey during FY17 to FY24. With a notable financial turnaround, expansions across traditional and new businesses, and a clear strategy for long-term growth, IH has become a market leader in the industry. At its Capital Market Day conference, IH has laid out its roadmap for the next five years – ACCELERATE 2030.  IH aims to become the most valued, responsible, and profitable hospitality brand in South Asia. The company plans to expand its portfolio to 700 hotels (including pipeline), double consolidated revenues to INR150b, and achieve 25%+ of revenues from innovative and reimagined businesses like Ginger, Qmin, and TajSATS. Traditional businesses (75% of revenues) will grow through RevPAR leadership, asset management, and managed inventory expansion, with management fees surpassing INR10b. New ventures, scaling at a 30%+ CAGR, and reimagined businesses will help IH sustain high margins and 20%+ RoCE, supported by a capitallight growth model and operational excellence.

Outlook

We believe the company’s strong operational performance, portfolio diversification, and focus on sustainability will provide a robust foundation for its ambitious 2030 goals. We have largely maintained our FY26 EBITDA estimates and raised our FY27 estimates by 8% to incorporate healthy ARR growth (~7% YoY), a robust hotel pipeline and an increase in F&B revenue, backed by healthy MICE growth. We maintain BUY with a TP of INR880 (based on FY27E SoTP).