The Indian Hotels Company share price has taken a beating, down 21% in six months, hit by Middle East war jitters and a fall from its highs, even as the broader market has not corrected as much. But Global brokerage house, Nomura, says it is not stepping away from the counter.
It has retained the ‘Buy’ rating while trimming the target price from Rs 830 to Rs 800, implying a 28.6% upside.
The brokerage house took cognizance of the recent turbulence but says the damage to the fourth quarter earnings is likely to remain limited, while the earnings trajectory from FY26 to FY28 stays intact with a projected annual EBITDA growth rate of 13% to 14% on a compounded basis.
The war dented the stock more than the business
The gap between Indian Hotels‘ share price performance and its operational trend has widened in recent months. The stock has fallen 21% over six months, compared with an 8% decline in the Nifty 50, a move Nomura links largely to geopolitical concerns rather than a deterioration in business performance.
January and February bookings remain strong, supported by large events such as the International Cricket Council World Cup in Mumbai and the Artificial Intelligence Summit in Delhi. March sees some cancellations, but management expects the overall impact on the quarter to remain contained, it says.
“Jan-Feb bookings were strong due to events such as the ICC World cup in Mumbai and the AI Summit in Delhi,” Nomura says, citing management commentary.
The brokerage expects fourth quarter FY26 consolidated revenue to grow about 11% year on year, with earnings before interest, taxes, depreciation and amortisation rising about 12%.
Three Dubai hotels are a specific pressure point, not the whole business
Of nearly 200 hotels under management contracts, only three Dubai properties are directly exposed to the disruption linked to the Middle East situation. Nomura expects some moderation in management fee growth in the near term, while the wider portfolio remains steady.
The standalone business is expected to see average daily rate growth of 4% quarter on quarter and 8% year on year in the fourth quarter, while occupancy remains broadly flat, leading to mid-to-high single digit growth in revenue per available room, the report adds.
“The company expects an impact on its three Dubai hotels which are under management contracts,” Nomura says.
FY27 comes with a built-in low base advantage
Nomura points out that disruptions in FY26, including Operation Sindoor and the Air India airline crash, are likely to create a favourable base for the following year.
“In FY27F, we believe the company will have several low base quarters due to geopolitical events in FY26 such as Operation Sindoor and the Air India airline crash,” Nomura says.
The brokerage expects acquisitions to contribute 200 to 300 basis points to revenue growth, with a similar contribution from new room additions at properties such as Taj Frankfurt, Varanasi and Ekta Nagar.
Nomura trims its revenue per available room growth estimate for FY27 to 7% from 8% to account for near-term disruption.
The management fee engine is set to pick up
Management fees remain central to the company’s asset-light model, and Nomura expects this stream to grow steadily as new properties are added.
The company has added more than 125 hotels in FY26 and FY27 is expected to see over 60 openings, with a significant share in the first half.
“We expect mid-high teen management fee growth driven by new unit additions,” Nomura says.
TajSats continues to grow, supported by aviation demand
TajSats reports revenue growth of 18% year on year and earnings before interest, taxes, depreciation and amortisation growth of 18% year on year in the third quarter of FY26, with margins at 25.6%.
Nomura expects the business to maintain double digit growth, supported by improving aviation activity and capacity additions.
Atmantan and Brij expand presence in premium segments
Indian Hotels has acquired a 51% stake in Atmantan, a wellness resort in Mulshi, Pune, and a 51% stake in Brij Hospitality, a boutique leisure platform.
Both are expected to contribute about Rs 90 crore to Rs 100 crore in revenue in FY27.
These acquisitions are supported by a strong balance sheet, with the company continuing to operate in a net cash position.
“Future acquisitions to bolster owned assets backed by strong cash reserves,” Nomura says.
The valuation math still supports the target
Nomura values the hotel business at 26 times FY28 earnings before interest, taxes, depreciation and amortisation and TajSats at 25 times, arriving at a target price of Rs 800 per share.
“Our new SOTP-based TP of INR800 is based on an unchanged 26x FY28F EV/EBITDA,” Nomura says.
The stock currently trades at about 22 times FY28 enterprise value to earnings before interest, taxes, depreciation and amortisation, which remains within the historical range seen during earlier growth periods.
Conclusion
Nomura lowered its estimates and built in near-term uncertainty, yet it continues to back Indian Hotels Company on the strength of its earnings growth, expansion pipeline and balance sheet position. The brokerage’s assessment suggests that the recent correction in the stock price does not fully capture the company’s medium-term earnings potential.
Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a SEBI-registered financial advisor.