Indian Hotels Q1 Results Review - Inline, Soft; Cautious Optimism, Limited Room To Err: Dolat Capital

Dolat Capital Report

The Indian Hotels Company Ltd.’s Q1 FY25 result was in-line. Standalone revenue/Ebitda/ adjusted profit after tax were at +4.6/11.3/10.9% and consolidated at +5.7/9.6/10.2% YoY.

Management guided double-digit revenue growth (low teens of 10-12%) over short-to-medium term driven by demand-supply mismatch, brand strength, market positioning, healthy pipeline of rooms under MC, network effect and execution.

We like Indian Hotels' business positioning but high base, lack of supportive events in FY25 unlike FY24 (G20, cricket WC, ICC matches in India with other countries, elections) and supply increase are key risks in our view.

We trim our FY25/26E revenue estimates by 2.2/2.1% and Ebitda estimates by 4.3/5.8% to factor weak Q1. Reiterate ‘Sell’ rating with target price of Rs 540 at 24 times H1 FY27E enterprise value/Ebitda (versus earlier Rs 545 at 24 times FY26E).

We expect revenue/Ebitda/APAT compound annual growth rate of 10%/14%/20% over FY24-27E. Indian Hotels valuation at ~33/28.5/24.5 times FY25/26/27E EV/Ebitda and 50.5/42.5/35.5 times PE leaves limited room to err especially if Hotel upcycle reverse which is a risk in our view. This is despite ~13% stock price correction from peak.

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