The shares of this Tata Group stock, engaged in the hospitality industry, came into focus in Friday’s trading session after analyst Morgan Stanley gave an “Overweight” call with a target price of Rs 856.
Stock Performance
With a market capitalization of Rs 1,07,412.20 crore, Indian Hotels Co. Ltd jumped over 2 percent on Friday and made a high of Rs 779.10 per share compared to its previous closing price of Rs 760.85 per share. The stock retraced from its day’s high and was trading at Rs 754.10 which is 0.9 percent lower than the previous closing price.
What Happened
Morgan Stanley gives an “Overweight” rating on Indian Hotels with a target price of Rs 856 indicating an upside potential of 12.5 percent compared to its previous closing price.
Rationale
Indian Hotels Co Ltd, India’s largest hospitality company by market capitalization, benefits from strong demand in Mumbai’s hospitality market. In January, revenue per available room (RevPAR) rose 21 percent in both Mumbai and Delhi, compared to 18 percent and 11 percent YoY respectively.
Puneet Chhatwal, Managing Director & CEO said “The revenue performance was driven by a 40 percent rise in New Businesses and double-digit growth in same-store hotels.” He also mentioned that the sector anticipates continued strong demand in the coming quarters, driven by large-scale regional events, weddings, and sustained transient travel.
Company Overview
Indian Hotels Company Limited, India’s largest hospitality firm focuses on owning, operating, and managing hotels, palaces, and resorts. Its diverse portfolio includes premium and luxury hotel brands alongside F&B, wellness, salon, and lifestyle offerings. The company’s key brands include Vivanta, Taj, Ginger, ama Stays & Trails and Khazana among others.
Financial Performance
In the latest quarter, Indian Hotels Co Ltd reported a 29 percent YoY increase in its revenue from Rs 1,964 crore to Rs 2,533 crore. On a quarterly basis, there was a 39 percent increase from Rs 1826 crore in Q2 FY25.
This was accompanied by a 33 percent YoY increase in net profits from Rs 477 crore to Rs 633 crore. On a quarterly basis, the company saw a 9 percent increase in profits from Rs 583 crore in Q2 FY25.
Company Outlook
Indian Hotels Co. Ltd.’s “Accelerate 2030” plan aims to expand its portfolio to 700 hotels, with over 500 operational by 2030, supported by Rs 5,000 crore in Capex.
IHCL expects 75 percent of revenue from traditional businesses and management fees and 25 percent from new or re-imagined businesses. The management fees would surpass Rs 1,000 crore by 2030. New brands like Ginger, Qmin, amã Stays & Trails, and Tree of Life will scale rapidly, to deliver over 30 percent revenue CAGR.
Taj, SeleQtions, and Vivanta will add 100 more hotels in the next five years. Further, 75 percent of new additions of the company will come from Tier I and II cities, led by Tree of Life, the re-imagined Gateway brand and Ginger.
Industry Outlook
India’s hospitality industry is expected to reach a market size of $24.61 billion in 2024, with projections indicating growth to $31.01 billion by 2029. This reflects a compound annual growth rate (CAGR) of 4.73 percent during the 2024–2029 forecast period.
Written by Shwetha Sairam
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