Shares of Indian Hotels Co Ltd (IHCL) on Thursday surged 5.62 per cent to hit their all-time high value of Rs 795.70. The stock eventually settled 4.44 per cent higher at Rs 786.85 on BSE. The Tata Group company has recently laid down its plan to double its current portfolio of 350 hotels (including pipeline) to 700 (including pipeline) with even the operational portfolio to double from 242 to 500.
Under ‘Accelerate 2030, IHCL said the focus will be on driving topline growth with 75 per cent from traditional businesses and management fees. Rest 25 per cent will come from new and re-imagined businesses, it added.
Nuvama Institutional Equities has maintained its ‘Reduce’ call on the counter with an unchanged target price of Rs 574, indicating a potential decline of 27.05 per cent against today’s closing price of Rs 786.85.
“While we appreciate IHCL’s positive outlook, we currently lack sufficient justification to revise estimates for revenue, profit margins, or valuation multiples (which is a function of stronger earnings or elongating cycle). The stock is trading at 33x FY26 and 29x FY27 EV/EBITDA, which we consider expensive given the earnings visibility,” the domestic brokerage stated.
“Its current expansion plans in next five years entail outflow of Rs 5,000 crore-plus, which we believe is equally split between renovation and new builds. It does not include the Bandstand (SeaRock and Shiroda project) property, Lakshadweep, Aguada and Shiroda property as plans for these properties are yet to be finalised. Back of the envelope calculation suggests these 980 keys may need another Rs 2,300–2,500 crore capex,” Nuvama also said.
Growth in its base business shall be driven by organic expansion and an 8 per cent annual increase in ARR, consistent with historical trends, it added.
With that being said, Nuvama mentioned that the company receiving clearances and approvals for its long-stuck Bandstand (Sea Rock), Shiroda and Aguada properties would be seen as a positive sign.
In contrast, no margin guidance which in turn implies higher leasing projects on the horizon that may be margin dilutive but RoCE accretive remain key risks. “Moreover, management’s ambition to seed a few foreign markets even at the cost of diluting margins may be another reason,” it also said.
IHCL is a part of the Tata Group and has a portfolio of 263 hotels in over 100 locations, data available on website showed.
