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Brokerage Downgrade Hits Indian Hotels
Indian Hotels Company Ltd. shares fell nearly 3% on Wednesday, January 7, after Morgan Stanley downgraded its rating and slashed its price target.
The brokerage shifted its stance on the stock to "equal weight" from "overweight," cutting the price objective to ₹780 per share from ₹811. This revised target suggests a potential 7% upside from Tuesday's closing price.
Valuation and Sector Outlook
Morgan Stanley acknowledged the company's success in building a robust hospitality ecosystem leveraging the Taj brand, which delivers industry-leading returns and free cash flow. However, the firm cautioned that revenue per available room (RevPAR) cycles, despite being strong, might offer limited upside surprises.
The current enterprise value (EV) to earnings before interest, tax, depreciation, and amortization (EBITDA) multiple of 27.5x for fiscal year 2027 adequately captures the stock's risk-reward profile, according to Morgan Stanley.
Analyst Sentiment Remains Mixed
This downgrade follows Indian Hotels' Managing Director and CEO, Puneet Chhatwal, reaffirming the firm's double-digit revenue growth guidance for FY26 in November 2025. He projected around 10% top-line growth for the second half of the current fiscal year, supported by a strong food and beverage business and an anticipated surge in wedding events.
Despite the downgrade, analyst sentiment remains largely positive. Of the 26 analysts covering the stock, 18 recommend "buy," six suggest "hold," and two advise "sell."
Indian Hotels shares touched an intraday low of ₹703.3 on Wednesday, trading down 2.4% at ₹708.8 around 10:45 AM. The stock has seen a 16.9% decline over the past year.