Indian Hotels stock hits new high in weak market; up over 100% in 13 months

Indian Hotels Company on Tuesday had set a target to grow consolidated revenue 2x to Rs 15,000 crore and double the portfolio of hotels to over 700 by 2030.

Indian Hotels Company (IHCL) hit a new high at Rs 774, gaining nearly 3 per cent on the BSE in Thursday’s intra-day trade in an otherwise weak market on a healthy outlook. In comparison, the BSE Sensex was down 0.73 per cent at 77,014 at 11:00 am.

 

Within 13 months, the market price of Tata Group’s hospitality arm and Taj Hotels’ parent company has more-than-doubled or zoomed 107 per cent from a level of Rs 374.65 on October 27, 2023. Thus far in the calendar year 2024, the stock has rallied 77 per cent, as compared to 7 per cent rise in the benchmark index.

 

 

IHCL on Tuesday set a target to grow consolidated revenue 2x to Rs 15,000 crore and double the portfolio of hotels to over 700 by 2030. Currently, IHCL has 232 operational hotels out of which 214 are in India. There are 118 properties under development globally across four continents, 13 countries and in over 150 locations. The company has not disclosed specific numbers for the Indian and international markets.

 

The company under its ‘Accelerate 2030’ strategy intends to double its consolidated revenue with a 20 per cent return on capital employed (RoCE), IHCL said in its release. The company will expand Taj, its luxury brand from 50 to 120 hotels and Ginger Hotels, a midscale brand from 46 to 100 hotels. It will also grow Vivanta Hotels, a business and leisure brand and The Gateway, IHCL’s upscale hotel brand, to 110 operational hotels by the year 2030.

 

IHCL anticipates industry tailwinds to remain intact in the longer run, driven by higher demand (9-11 per cent compound annual growth rate (CAGR)) and limited supply (7-8 per cent CAGR). Most of the supply is coming in Tier 2/3 cities, thereby benefiting Tier 1 markets. It also plans to tap into the growth in the MICE segment (Meetings, Incentives, Conferences and Exhibitions), in which the industry clocked 18 per cent CAGR. Emerging trends like wellness, sustainable tourism, and digital nomad-friendly stays also offer strong growth opportunities.

 

Analysts at Motilal Oswal Financial Services (MOFSL) believe the company’s strong operational performance, portfolio diversification, and focus on sustainability will provide a robust foundation for its ambitious 2030 goals. 

 

The brokerage firm have largely maintained our FY26 earnings before interest, tax, depreciation, and amortisation (EBITDA) estimates and raised our FY27 estimates by 8 per cent to incorporate healthy average room rate (ARR) growth (~7 per cent YoY), a robust hotel pipeline and an increase in F&B revenue, backed by healthy MICE growth. Analysts maintain BUY rating on the stock with a target price of Rs 880 (based on FY27E SoTP).

 

Meanwhile, analysts at Elara Capital have revised IHCL to 'Accumulate', from 'Sell', with a higher target price of Rs 795, from Rs 519 earlier, based on SoTP analysis.

 

With industry-leading portfolio addition, IHCL is on track to open 25 hotels in FY25. Despite the increased pace of new signings in the industry, its key Taj branded assets in different micro markets pan-India are facing fewer new supplies from competition. Thus, there is continued growth momentum.

 

"IHCL outperformed our estimates in Q2. IHCL is a bigger beneficiary of the strong demand undercurrent than what we had estimated earlier," the brokerage firm said.