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Indian Hotels Company Ltd. (IHCL), through a scheme of arrangement, has announced the merger of its associate company, Oriental Hotels (OHL), with IHCL

ICICIdirect Research 25 Aug 2026 DISCLAIMER

News: Indian Hotels Company Ltd. (IHCL), through a scheme of arrangement, has announced the merger of its associate company, Oriental Hotels (OHL), with IHCL. IHCL currently holds 37.1% stake in OHL. OHL has 7 hotels and 825 rooms in its portfolio. The transaction is an all-equity stock deal, with consolidation effective from 1st April 2027. Under the scheme, for every 117 shares of OHL held, OHL shareholders will receive 25 shares of IHCL, implying a 1:4.68 swap ratio (IHCL:OHL). As per our calculation, IHCL’s share capital will increase by 2.32cr equity shares post the deal, implying ~1.6% dilution. Post merger, IHCL’s standalone hotel portfolio will see an addition of 7 hotels and 825 rooms, including 3 freehold properties. Management has highlighted that the merger will be EPS accretive from Year 1, with the primary motive being to simplify the structure, reduce cross-ownerships and simplify operations and governance. It also expects the merger to lead to better cost efficiency while asset upgrades and expansion also expected to be margin accretive on consolidated basis.

View: OHL’s revenues stood at Rs.494cr in FY26 and have recorded a revenue CAGR of 7% over the past 3 years. Assuming a similar revenue CAGR of 7%, we estimate OHL’s revenues at ~Rs.570cr in FY28E. With management guiding for EBITDA margins of ~30-35% for OHL post merger, we estimate EBITDA of Rs.171cr in FY28E at 30% margins. Post consolidation of OHL and IHCL, consolidated revenue stands at Rs.12780cr, with EBITDA of ~Rs.4415cr and an EBITDA margin of 34.5% on our assumptions. Our FY28E PAT stands at ~Rs.2988cr. With current equity capital at 142.3cr shares and the merger resulting in issuance of an additional 2.32cr shares, the equity capital would increase to 144.6cr shares in FY28E. This implies FY28E EPS of Rs.20.7 post merger vs Rs.20.3 earlier, translating into ~2% EPS accretion, in line with management’s guidance of the deal being EPS accretive from Year 1.

Impact: Neutral

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