What IHCL's Q1 Result Could Mean For Hospitality Sector This Fiscal
A lack of major events and rich valuations could mean muted growth for the sector.
The Indian Hotels Co., one of the leading hospitality companies in India, saw its revenue rise in the first quarter of current fiscal. However this metric was failed to meet the levels seen in previous quarters. A lack of special events in the current year could weigh on the overall growth of the hospitality sector, according to brokerages.
Fiscal 2023 and 2024 had been robust growth years for hospitality industry, especially IHCL. But fiscal 2025 would be lacking major events unlike FY24, which saw the G20 and the Cricket World Cup, Dolat Capital said.
Downgrades by corporates/individuals and higher outbound travel are add-on risks, it said.
Revenue of the leading hospitality player rose 5.7% year-on-year to Rs 1,550 crore, but was impacted by multiple headwinds.
The headwinds included general elections, fewer wedding days, and extreme heat wave in the April-June quarter. IHCL's wedding revenue dipped about 25%, with 15 fewer auspicious wedding dates as compared to the last year.
Further, on the international portfolio the company expects near-term uncertainties to continue for the next six to eight months in the USA due to ongoing elections.
IHCL Q1 FY25 Results Key Highlights (Consolidated, YoY)
Revenue up 5.7% to Rs 1,550 crore (Bloomberg estimate: Rs 1,580.5 crore).
Ebitda up 9.6% to Rs 450 crore (Estimate: Rs 458.4 crore).
Margin expanded to 29% versus 28% (Estimate: 29%).
Net Profit up 10% at Rs 260 crore (Estimate: Rs 255.1 crore).
Growth Guidance For FY25
Despite a weak start to FY25, the company maintained its double-digit growth guidance (10-12%) for the year. This will be on the back of new business reporting more than 30% growth and higher management fee income.
With 12 more auspicious dates from July 2024 to March 2025, compared to the same period last year, Indian weddings are expected to stage a strong comeback for the remaining period in FY25.
The management expects 20% revenue growth in the first seventeen days of July 2024.
Here is what brokerages said about IHCL's Q1 results.
Emkay
Has an 'add' rating, with a price target of Rs 615 per share, implying a 6.4% upside.
Slower revenue growth than previous quarters due to multiple headwinds.
Management maintains double-digit revenue growth in FY25 despite weak start.
Cuts FY25/26 Ebitda by 0-3% factoring in Q1 performance.
Valuations are rich which limits upside.
Nuvama
Maintained a 'hold' rating, with a target price of Rs 568, implying a 1.7% downside.
Elections and extreme heatwave led to weak revenue growth in Q1.
Management sees 20% growth in first 17 days of July 2024.
Q2 FY25 likely to surpass Q1 FY25 by a fair distance.
Revised revenue estimates for FY25E/26E by 12%/20% factoring TajSATs consolidation
Valuations remain rich with strong growth priced in.
