Indian Hotels Shares Jump 3% as Analysts Raise Q2 Estimates

Analysts Upgrade Estimates Boost Indian Hotels Shares Amid Strong Q2 Performance

Indian Hotels Company Limited sees a notable share price increase as analysts respond positively to its robust quarterly results.

Strong Q2 Results Drive Investor Confidence

IHCL’s Q2 results showcased a significant 23% increase in consolidated profit, reaching ₹349 crore, alongside a 21% year-on-year growth in revenue, which totaled ₹2,566 crore. This performance was largely attributed to a robust revenue per available room (RevPAR), the impact of renovated assets, and the introduction of new business initiatives. The company’s earnings before interest, tax, depreciation, and amortisation (EBITDA) also rose by 21% to ₹788 crore, with margins holding steady at 30.7%.

The management’s decision to upgrade its FY27 revenue growth guidance from 12-14% to 15-17% further bolstered investor sentiment. This optimistic outlook is supported by strong hotel revenue growth, anticipated MICE (Meetings, Incentives, Conferences, and Exhibitions) events, and continued expansion in non-comparable growth segments.

Analysts React with Upgraded Targets

Following the impressive quarterly results, several brokerages have adjusted their earnings estimates for IHCL. Jefferies raised its FY27 EBITDA and EPS estimates by 1.2-1.5%, incorporating the consolidation of Oriental Hotels from FY28, and increased its target price for the stock to ₹900 from ₹875. The firm maintains a BUY rating, reflecting confidence in the stock’s valuation based on a multiple of 28 times the September 2028 EBITDA.

Similarly, 360 One Capital has revised its target price for IHCL to ₹920 from ₹880, emphasizing the favorable demand-supply dynamics in the domestic hospitality sector. The brokerage also raised its FY27-29 EBITDA estimates by 2-4%, reflecting the positive impact of the Q2 results.

Challenges and Cautions Ahead

Despite the positive outlook, not all analysts are as bullish. Nuvama Research noted a sluggish performance in the air catering business, attributed to geopolitical tensions in West Asia. They adjusted their revenue forecasts for FY27 and FY28 upwards by 1.9% but lowered their EBITDA estimates slightly. Nuvama retains a ‘HOLD’ rating with a target price of ₹750, reflecting cautious optimism as the company continues to build on its H1 momentum.

Key Highlights

• IHCL’s Q2 profit rose 23% to ₹349 crore, driven by strong RevPAR and renovated assets.
• Revenue increased by 21% year-on-year to ₹2,566 crore.
• Management upgraded FY27 revenue growth guidance to 15-17% from 12-14%.
• Jefferies raised target price to ₹900, maintaining a BUY rating.
• 360 One Capital revised target price to ₹920, citing favorable demand-supply dynamics.
• Nuvama Research maintains a HOLD rating with a target price of ₹750 due to challenges in the air catering segment.

Investor Note: Investors should consider the mixed outlook from analysts, balancing the strong performance and growth potential of IHCL against potential challenges in specific segments. The stock’s recent price movement reflects positive sentiment, but ongoing geopolitical factors may influence future performance.