Indian Hotels - Rapid Scaling Up Of Margin-Accretive New Businesses: Motilal Oswal

Motilal Oswal Report

Indian Hotels Company Ltd.’s new and re-imagined businesses Ama Stays, Qmin, Chambers, and management contracts are expected to scale up rapidly on the lower base and high growth runway.

These businesses are margin accretive with higher margin flow through, thereby driving up the return on capital employed. The new business is expected to contribute ~26% to the company’s operating profits by FY25.  Ama stay portfolio is expected to grow five times in the next two-three years with robust revenue growth, driven by the thriving industry and synergy with the group businesses.

Further, it is aided by India Hotels’ asset light model. The business has higher a flowthrough of ~60-65%.

Indian Hotels is establishing its Qmin brand across verticals of food delivery/quick service restaurant/ restaurants. Growing food delivery industry (~30% compound annual growth rate) and qminization of Ginger (from 8 to ~90 hotels) is expected to drive the growth ahead.

Member additions are expected to drive the incremental growth for Chambers (initiation fees forms ~50% of Chamber’s revenue in H1 FY23).

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