Sharekhan's research report on Indian Hotels Company
Indian Hotels Company Ltd (IHCL) delivered one of the best quarterly set of numbers in Q3FY2023, with consolidated revenues growing by 52% y-o-y to Rs. 1,685.8 crore (23% versusQ3FY20) while EBIDTA margins improved to 35%. RevPar grew by 28% over the pre-COVID levels. With room demand expected to exceed room supply, domestic business will maintain strong growth momentum in the coming years. International properties are expected to recover to pre-COVID level in FY2024. High margin new businesses will scale-up fast to add to profitability. High free cash generation (Rs. 1520 crore in 9MFY23) will be utilised to repay debentures, renovation of existing hotels, improved dividend policy and maintain reserves to combat with any black swan event (such as pandemic).
Outlook
The stock has corrected by 14% from its recent high and is currently trading at 18x/15x its FY2024/25E EV/EBIDTA. We maintain a Buy on the stock with an unchanged price target of Rs. 380.
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