Indian Hotels is in focus amongst the hospitality sector stocks after geopolitical headwinds and flight disruptions impacted Q1FY26 performance. Nuvama is maintaining its ‘Reduce’ rating on the stock with a target price of Rs 648 per share. This implies over 10% downside from current levels for the share price of Indian Hotels. This is after “explicit management commentary on a very strong near-term outlook and significant margin expansion—like previous quarters—was lacking.” However, this target price is slightly higher than the earlier target of Rs 628 per share.
Nuvama on Indian Hotels: Measured optimism
Nvama highlighted that IHCL achieved Q1FY26 revenue per available room growth of 11% YoY in its domestic portfolio “despite geopolitical challenges and flight disruptions that trimmed its overall performance by 2–2.5%.”
Apart from that, it also pointed out that occupancy dipped only 90 bps YoY, whereas average room rate rose 12% YoY. Though the management reaffirmed their “double-digit growth guidance for the year and reported a strong start to July.”
However, any specific or pointed guidance for the near-term is lacking.
Nuvama on IHCL: Pick-up in F&B business
The growth in the hotel segment was 13% YoY after geopolitical disruptions as well as the disruption of flight routes impacted growth negatively by about 2–2.5%. Nuvama pointed out that the 17% YoY growth in enterprise revenue per available room fuelled a 17% YoY increase in management fee income. Along with that, the domestic same-store hotels posted consolidated 11% RevPAR growth (YoY).
They have additionally highlighted that the room revenue increased 7% YoY despite 40 rooms of Taj Aguada (Goa) and 150 rooms of Taj Palace (Delhi) under renovation. The 13% uptick in F&B business consolidated entity has been the strongest-performing lever. TajSATS grew 21% YoY, clocking a 23.5% EBITDA margin. The change in accounting treatment for airport levy also weighed on sentiment.
Nuvama on IHCL: International business improves
One of the reasons why Nuvama has raised the price target slightly for IHCL is the pickupin the international business. The company’s London business has shown strong improvement, up 20% in July post-recent room renovations.
IHCL also plans to spend another 22 million pounds in the current year for renovation of private clubs, chambers, and meeting spaces. The company’s US portfolio delivered strong RevPAR growth of 18% YoY. However, Nuvama added that “San Francisco has also started to revive but still has a huge pickup due. The international consolidated portfolio achieved an occupancy of 78% (+460 bps YoY), which translated to RevPAR growth of 13% YoY.”
Indian Hotels: Current portfolio
The current portfolio for Indian Hotels stands at 392 hotels aggregating 47,272 rooms. This includes 249 operating hotels with 27,072 rooms. The hotel major opened 6 new hotels in Q1FY26. This includes the Taj Alibaug and The Claridges. Going forward, IHCL plans to add 504 owned rooms across four hotels in FY26.
