On Friday, Investec (LON:INVP) maintained its Hold rating on Indian Hotels Company (IH:IN) stock and increased the price target to INR742.00 from INR630.00. The upward revision follows a strong performance in the company's second fiscal quarter of 2025, where consolidated revenue saw a year-over-year increase of 27%. This growth was primarily driven by a 9% rise in average room rates to Rs10,800 and a 200 basis point increase in occupancy to 77%.
The analyst noted the additional boost from a 47% year-over-year growth in new business segments, which include TajSats, ama, Ginger, and Qmin. Despite these expansions, Indian Hotels Company's management has confirmed its capital expenditure target of Rs25 billion for the period from FY25 to FY27. The company also has a significant number of keys in the pipeline, with 3,500 owned and 13,800 managed.
The report highlighted the strong demand trends and the increased contributions from reimagined business segments. The company's asset-light model is expected to scale up capacities efficiently while managing costs effectively. These factors are anticipated to provide clear growth visibility moving forward.
Investec has revised its estimates to account for the consolidation of Taj SATs and now anticipates the company's margins to remain steady at 32% and 32.5% for FY26 and FY27, respectively. The profit after tax (PAT) is expected to grow at a compound annual growth rate (CAGR) of 24% over FY24-27. The new price target of INR742 is based on a FY27EV/EBITDA multiple of 27 times, up from the previous multiple which supported the INR630 target.
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