 "Indian Hotels hits new high; surges 6% on strong Q2 operational performance")
Indian Hotels Company (IHCL) shares hit a new high of Rs 722, as they rallied 6 per cent on the BSE in Friday’s intra-day trade in an otherwise range-bound market, after the company reported a strong operational performance for the second quarter ended September 2024 (Q2FY25).
The stock has surpassed its previous high of Rs 720.60 that it touched on September 24, 2024. In comparison, the BSE Sensex was up 0.02 per cent at 79,558 at 10:12 AM. The average trading volumes on the counter had jumped three-fold, and a combined 9.9 million equity shares had changed hands on the NSE and BSE during the trading session so far.
IHCL reported a more than three-fold rise in its Q2FY25 consolidated net profit at Rs 582.71 crore, helped by exceptional gains from the consolidation of its air and institutional catering business segment TajSATS. The company had posted a net profit of Rs 178.97 crore in the year-ago period. Its revenue from operations increased 28 per cent year-on-year (YoY) to Rs 1,826 crore from Rs 1,433 crore in the corresponding quarter of the last financial year.
The management said the second quarter witnessed a strong revival of demand resulting in overall revenue growth of 28 per cent and 16 per cent growth for the hotel segment, marking the best ever Q2 consolidated earnings before interest, tax, depreciation, and amortisation (EBITDA) margin at 29.9 per cent for the company. IHCL's margins improved 270 bps from 27.2 per cent in Q2FY24.
For FY25, the management maintained a double-digit revenue growth guidance led by the sustained growth in new businesses, not like-for-like growth and healthy same store performance. This is reflected in a strong 16.5 per cent growth in consolidated hotel segment revenue in October, which is set to accelerate in the remaining months of Q3, the management said.
IHCL and its subsidiaries bring together a group of brands and businesses that offer a fusion of warm Indian hospitality and world-class service. These include Taj - the iconic brand for the most discerning travelers; SeleQtions, a named collection of hotels; Vivanta, sophisticated upscale hotels; and Ginger, which is revolutionising the lean luxe segment.
Motilal Oswal Financial Services said the outlook for IHCL remains strong, led by healthy traction within the core business and accelerated growth trajectory in new and reimagined businesses. The brokerage firm expects the strong momentum to continue in the medium term, led by an increase in average room rate (ARR) due to healthy demand, asset management strategy (upgrades in hotels), and corporate rate hikes; higher occupancy levels as a result of favourable demand-supply dynamics; strong room addition pipeline till FY28 in both owned/leased (3,532 rooms) and management hotels (13,822); higher income from management contracts; and value unlocking by scaling up reimagined and new brands.
Meanwhile, Indian tourism is being driven by favourable demographics, increasing employment, higher disposable income of a young middle class, robust domestic demand, increased investments and improving infrastructure and connectivity. Further, the Indian government's Ministry of Tourism has initiated several schemes such as ‘Swadesh Darshan’, PRASHAD, UDAN and ‘Dekho Apna Desh’ to promote travel. As many as 50 tourist destinations are in the pipeline for being developed to provide a wholesome tourism experience under the ‘Swadesh Darshan’ scheme.
The sector is well-positioned to capitalise on an upcycle, driven by the demand-supply gap, market penetration opportunities in Tier II and III markets, strong demand drivers such as MICE (Meetings, Incentives, Conferences & Exhibitions), spiritual tourism, the rebound in foreign tourist arrivals and destination weddings.