Nomura has raised its price target for Indian Hotels Company Ltd (IHCL) to ₹830, citing strong domestic hospitality demand. The brokerage expects the company to beat its FY27 revenue growth guidance following a robust first-quarter performance. Investors should track how the company manages international operational costs alongside its domestic growth.
Detailed Coverage
Indian Hotels Company Ltd (IHCL) has received a positive outlook from Nomura Securities, which raised its price target for the stock to ₹830. This upward revision follows a strong first quarter for the fiscal year 2027, where the company saw its revenue and operating profit, or EBITDA, exceed market forecasts by 2% and 3%, respectively.
Strong Domestic Performance Drives Growth
The company’s standalone financial results showed a significant 18% year-on-year increase in revenue, reaching ₹1,230 crore. The operating profit, or EBITDA, grew by 31% to ₹480 crore. A key factor behind these numbers was a 14% improvement in Revenue per Available Room (RevPAR), a critical metric for hotel chains that measures both the average room price and occupancy levels. Occupancy rates reached 82%, up from 76% in the same period last year, while average daily room rates increased by 6%.
Leisure travel continues to be a major contributor, with properties in Rajasthan and Goa reporting revenue jumps of 27% and 29%, respectively. Furthermore, the company’s city hotels saw a 12-13% increase in revenue, supported by corporate bookings and local staycations. The successful integration of the Atmantan brand and rising income from management fees also helped bolster the company’s bottom line.
Outlook and Potential Pressures
While domestic demand remains high, the company faces different challenges in other areas. Nomura noted that EBITDA estimates for TajSATS, the company’s airline catering arm, were lowered slightly. This adjustment is due to expected lower air traffic levels stemming from Middle East disruptions. Additionally, international subsidiaries are seeing a slower ramp-up in profit margins. These global factors are important for investors to monitor, as they can offset the gains made by the strong domestic business.
IHCL’s management has expressed confidence that the current robust domestic demand will continue through the second quarter. Nomura projects that the company is well-positioned to exceed its initial FY27 revenue growth guidance of 12-14%, potentially reaching 15% growth for the standalone business.
For investors, the next steps include tracking the sustainability of occupancy rates in the upcoming quarters and observing how international operations manage the pressure from reduced air travel. The company’s ability to maintain its margin growth while navigating global headwinds will remain a key factor to watch in the coming financial updates.