ICICI Securities has reiterated its BUY rating on Indian Hotels Company Limited (IHCL), with a robust target price of Rs 941 and a current market price standing at Rs 743. The brokerage underscores IHCL’s stellar financial performance this quarter, pointing to solid demand factors and strategic expansion plans propelling the growth trajectory. The ICICI research report distills the highlights from the recent earnings update, laying out the fundamental drivers for investors and detailing actionable levels, risk factors, and a forward-looking outlook.

ICICI Research View on Indian Hotels

Indian Hotels has demonstrated solid resilience in its financial performance, with enterprise RevPAR increasing 9% and consolidated revenue rising 20% in the first half of FY26. EBITDA also grew by 21%, supported by a strong demand outlook and operational efficiencies. The company expects momentum to continue into H2FY26 driven by higher volumes in MICE business and weddings, along with renovated hotel rooms. The stock is valued at a 32x EV/EBITDA multiple based on estimated September 2027 financials and is seen as an attractive BUY at current levels.

Robust Demand and Growth Catalysts

Q2FY26 results showed a revenue of Rs 20.4 billion, up 12% year-on-year, with EBITDA rising 14%. The company’s pipeline includes numerous large-scale events and a higher number of weddings compared to last year, providing strong bookings visibility into the second half. IHCL’s plan to increase operational hotels from 247 to 500 by FY30 underscores aggressive growth ambitions, supported by a cash-rich balance sheet. This expansion is expected to boost revenues and margins while maintaining leadership in India’s hospitality sector.

Financial Performance and Growth Projections

A 15% compounded annual revenue growth and a 17% EBITDA CAGR are projected for FY25–28. Key drivers include sustained RevPAR growth in high single digits, management fees growing at 15-18%, and new business revenue rising by 30% annually. IHCL benefits from an asset-light model that prioritizes management contracts over owning properties, improving capital efficiency and profitability.

Key Financials and Target Levels

Potential Risks

Investors should monitor occupancy trends closely, as any significant drop-off could impact revenue growth. Discretionary spending patterns are another key risk, especially if macroeconomic conditions tighten or geopolitical tensions disrupt travel flows. Additionally, rapid expansion could lead to operational challenges if execution is not flawless.

Operational Strength and Financial Prudence

IHCL's management exhibits strong capital discipline and operational excellence, evidenced by expanding margins and a healthy cash position of Rs 28.5 billion. The focus on digital initiatives and an asset-light business model enhances scalability and return on invested capital. The company’s commitment to Environmental, Social, and Governance (ESG) principles further positions it favorably in the eyes of investors.

Trader & Investor Action Points

- Current levels around Rs 743 offer an attractive entry point relative to the target of Rs 941, implying robust upside potential. - Support is eyed near Rs 700, a level that can be used for strategic accumulation. - Crossing above Rs 770 could serve as a near-term momentum trigger for additional gains. - Long-term investors aligned with India’s expanding travel and hospitality market should consider adding to positions on dips.

Final View on Stock Levels

Indian Hotels remains a compelling structural growth story. Backed by strong demand fundamentals, a clear growth roadmap, and prudent financial management, the stock offers a promising risk-reward profile. The BUY rating at current prices reflects confidence in IHCL’s ability to capitalize on India’s burgeoning hospitality demand through FY30.