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Indian hotels Company: Strong Q4; growth momentum to sustain in Q1FY26

ICICIdirect Research 09 May 2025 DISCLAIMER

Indian hotels Company: Strong Q4; growth momentum to sustain in Q1FY26

  • Consolidated revenues grew by 27% YoY to Rs2,425crore in Q4FY25 with operating EBIDTA margins improved by 230bps YoY to 38.5% in Q4FY25.
  • IHCL’s average occupancy at 80% in Q4FY25, while ARR witnessed 15% growth.
  • Management expects growth momentum to sustain in Q1FY26. April,25 Revpar grew by 17% yoy on base of high single digit. May-Jun,25 period is also expected to be strong on back of sustained high demand and low base of Q1FY25 affected by extreme heat and general elections.
  • With room demand expected to stay ahead of room (room demand to grow by 6-7% vs. supply growth of 2-3%), the standalone hotel business is expected to maintain steady growth momentum with Revpar growth of 8-10% in existing hotels. IHCL consolidated revenues are expected to grow at CAGR of 18% over FY25-27E
  • We expect consistent improvement in the EBIDTA margins to 36% by FY27E with consolidated EBIDTA to grow at CAGR of 24% over FY25-27E.
  • Post the correct of 15% from its high, the stock provides good entry opportunity with favourable industry tailwinds, strong room inventory and expansion through asset light strategy aiding company to achieve double digit earnings growth over the next two years. We recommend Buy with a price target of Rs950.
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