Buy Indian Hotels; target of Rs 455: Emkay Global Financial

Emkay Global Financial's research report on Indian Hotels

Indian Hotels Company (IHCL) delivered in-line consolidated revenue, aided by standalone occupancy of 75.9% (vs. 69.8% in Q2FY23) and ARR/RevPAR growth of 18% YoY/28% YoY, though consol. margin disappointed. IHCL’s growth outlook on H2 remains robust, with business on books staying strong and Ginger RevPar expected to grow over 20% YoY. We like IHCL’s diversified topline, operational efficiency and debt-free balance sheet. IHCL has a pipeline of 82 hotels, and is set to add ~11k rooms (~8.8k room-adds over FY24-26E). This will aid consol. revenue/EBITDA CAGR of 13%/16% over FY23-26E, amid margin expansion.

Outlook

We have cut consol. EBITDA by 4%/7% for FY25E/FY26E, as we reduce margin expectation due to the margin miss. We maintain BUY on IHCL, with TP of Rs455/sh (Rs485 earlier), ascribing 23x Sep-25E EV/EBITDA.

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