Motilal Oswal has reiterated its ‘Buy’ rating for Indian Hotels Company with a target price of Rs 870, indicating an expected upside of almost 19% from current levels. This confidence from the brokerage house came after the hospitality sector stock reported earnings in line with estimates.
Robust growth outlook for FY27
The firm expects Indian Hotels to achieve 12-14% revenue growth in FY27, driven by sustained domestic travel demand, strength in leisure destinations, and a significant room pipeline of 32,500 keys (81% of which are asset-light).
The Tata Group hospitality company reported a consolidated revenue growth of 15% YoY in Q1FY27, led by 18% growth in the standalone business and 11% growth in subsidiaries. Growth in the standalone business was led by room revenue (RevPAR up 14%), followed by F&B revenue, which was up 9%, and management fees (up 20%).
Strong domestic performance offsetting international softness
Domestic RevPAR grew by 14% YoY in Q1FY27, led by strong momentum in leisure markets like Rajasthan, which grew 27%, and Goa, which surged 29%. This helped offset softer trends in international markets such as Dubai and the Maldives.
“Indian Hotels is expected to clock 12-14% growth in FY27, driven by sustained domestic travel demand, continued strength in leisure destinations, and robust growth across its asset-light management business and emerging brands such as Ginger, Qmin, amã Stays & Trails and Tree of Life,” said Motilal Oswal.
Rapid expansion of new business verticals
Indian Hotels’ new business brands, which include Ginger, Qmin, amã Stays & Trails, and Tree of Life, reported healthy consolidated revenue growth of 22% YoY, with Ginger continuing to strengthen its leadership in the midscale segment.
Ginger continues to strengthen its leadership in the midscale segment with a portfolio of over 260 hotels, and 95 are under pipeline. The company migrated 15 ANK Hotels and Pride Hospitality properties to the Ginger brand in Q1FY27, with further migrations planned, while also working to convert select management contracts into revenue-sharing arrangements to enhance profitability.
Significant financial flexibility
The company maintains a strong gross cash balance of around Rs 4,400 crore, providing the flexibility to fund its planned routine capex of Rs 500-600 crore annually as well as potential inorganic acquisitions and major renovations.
“We remain optimistic on Indian Hotels’ growth outlook despite near-term geopolitical and macroeconomic uncertainties, led by healthy traction in the core business as well as new and reimagined businesses. This is also attributed to the expansion of the brandscape through the acquisition of niche category hotels,” said Motilal Oswal.
Indian Hotels Q1 FY27
The company posted a 20.8% year-on-year increase in consolidated net profit at Rs 358 crore in the first quarter of FY27, compared with Rs 296 crore in the same quarter a year back.
Its revenue from operations surged 14.6% to Rs 2,339 crore, while operating EBITDA increased 17% to Rs 673 crore. Operating EBITDA margin expanded to 28.8% from 28.2% last year.
Indian Hotels share price performance
The share price of Indian Hotels has fallen 2% in the last five trading sessions. The stock has dropped over 1% in the past one month. However, the stock has risen more than 10% in the last six months. Indian Hotels’ share price has declined 4.2% over the previous 12 months.
