Indian Hotels Company Limited (IHCL), India’s largest hospitality platform, delivered a steady Q2FY26 performance marked by resilient demand, disciplined cost control, and continued benefits from its asset-light expansion strategy. While revenue and EBITDA growth remained healthy, softer MICE demand in key metros and premium valuations temper near-term optimism. Geojit Financial Services has revised its stance to HOLD, citing limited upside despite strong structural fundamentals. With renovations nearing completion, premiumisation underway, and a growing international footprint, IHCL remains a long-term compounder—though current valuations leave little room for aggressive accumulation at prevailing levels.

Geojit Financial Services Initiates HOLD on Valuation Discipline

Geojit Financial Services has reaffirmed a HOLD rating on Indian Hotels Company Limited, setting a 12-month target price of Rs. 789 against a current market price of Rs. 726, implying a potential upside of 9 percent. The brokerage acknowledges IHCL’s strong operational momentum but flags premium valuation multiples as a constraint on near-term returns. The target is derived using 28.5x FY27E EV/EBITDA, a multiple that already factors in much of the company’s growth visibility.

Q2FY26 Performance Shows Operational Resilience

IHCL reported consolidated Q2FY26 revenue of Rs. 2,041 crore, up 11.8 percent year-on-year, driven by steady corporate travel, recovery in leisure demand, and improved international performance. The quarter was partially impacted by renovation-related disruptions, yet underlying demand trends remained firm across most geographies.

EBITDA rose 13.7 percent YoY to Rs. 570 crore, supported by cost rationalisation, operating leverage, and a favorable revenue mix. EBITDA margin expanded 40 basis points YoY to 27.9 percent, underscoring management’s focus on profitability rather than volume-led growth.

RevPAR Growth Moderates, Demand Fundamentals Remain Intact

Revenue per available room (RevPAR) for Q2FY26 grew in the mid-single digits, reflecting softer demand from the MICE segment in Mumbai and Delhi, albeit on a high base. Management highlighted that the softness was transient, with weddings and leisure travel offsetting part of the slowdown.

Most non-metro and international markets posted mid-single to double-digit RevPAR growth, reinforcing the company’s diversified geographic exposure. Average room rates (ARRs) remained firm, aided by premiumisation and renovation-led upgrades.

Hotel Services Revenue Anchors Stability

Hotel services revenue increased 5.8 percent YoY to Rs. 1,758 crore, driven by improved ARRs, wedding-related bookings, and reopening of renovated properties. The company continues to recalibrate its portfolio toward higher-yielding segments, balancing luxury, upscale, and mid-scale offerings across brands such as Taj, Vivanta, and Ginger.

Asset-Light Strategy Strengthens Return Profile

IHCL’s asset-light model remains central to its long-term competitiveness. The company continues to prioritise management contracts and leases, particularly in Tier-2 and Tier-3 cities, enabling market share gains while protecting return on capital employed.

During the quarter, two company-owned greenfield hotels—Vivanta and Ginger—were opened at Ekta Nagar, Gujarat, reflecting selective balance-sheet deployment into destination assets. Meanwhile, partnerships with groups such as Ambuja Neotia and Madison Group are accelerating capital-light expansion.

Expansion Pipeline and International Ambitions

IHCL’s global footprint continues to expand, with operations across 380+ hotels in over 14 countries. The upcoming Taj Frankfurt, slated for opening in 2026, is expected to enhance the company’s presence in the global corporate and group travel segment.

Key domestic projects—including Taj Bandstand in Mumbai and the 100-key expansion at Taj Ganges, Varanasi—are progressing as planned. Management reiterated confidence in achieving double-digit revenue growth, supported by a robust H2FY26 outlook driven by global events and a strong wedding season.

Financial Trajectory Remains Robust

The table below outlines IHCL’s consolidated financial trajectory, highlighting sustained growth across key metrics:

Valuations: Strength Priced In

Despite strong fundamentals, IHCL trades at EV/EBITDA multiples of 30.7x FY26E and 26.4x FY27E, a premium to most listed peers. Geojit believes these valuations adequately reflect the company’s growth prospects, limiting scope for material re-rating in the near term.

Investment Levels and Strategy

Current Market Price (CMP): Rs. 726
Target Price (12 months): Rs. 789
Rating: HOLD

Investors with existing exposure are advised to hold positions, while fresh accumulation may be considered only on meaningful corrections closer to long-term support zones. IHCL remains a high-quality hospitality franchise, but patience is warranted at current valuation levels.

Bottomline: A Long-Term Compounder, Short-Term Prudence Required

Indian Hotels Company Limited continues to execute well on strategy, combining brand strength, disciplined capital allocation, and operational excellence. However, with much of the optimism already priced in, Geojit’s HOLD stance reflects a prudent balance between growth visibility and valuation discipline. For long-term investors, IHCL remains a cornerstone hospitality play—best approached with calibrated expectations.