Nomura analysts project strong revenue and operating profit growth for Indian hotel operators in Q1FY27, driven by rising room rates. While domestic demand remains resilient, the brokerage warns of risks from potential geopolitical issues and inflationary pressure on margins.
Analysts at Nomura have issued their earnings outlook for the Indian hospitality sector for the first quarter of the 2026-27 financial year. The brokerage reports that steady domestic demand is currently offsetting weaker international travel trends, which have been pressured by global geopolitical concerns.
Growth Drivers in Hotel Sector Earnings
Nomura identifies Leela Palaces Hotels & Resorts as a preferred pick for the quarter, projecting a 14% year-over-year revenue increase and a 16% rise in operating profit, or EBITDA. This anticipated performance is largely supported by double-digit growth in Revenue Per Available Room (RevPAR), primarily due to higher Average Daily Rates (ADR). Investors should note that the company’s upcoming financial report will include contributions from its recently acquired Coorg property, which may influence overall financial results.
Indian Hotels Company is also expected to see significant growth, with Nomura estimating a 13% year-over-year increase in both revenue and operating profit. Key factors influencing these figures include the stabilization of its Ginger and Vivanta properties in Ekta Nagar, alongside recent expansions at Taj Varanasi and renovations at the Taj Palace in Delhi. The standalone revenue for Indian Hotels is projected to reach approximately ₹1,170 crore for the quarter.
Mixed Performance Across Segment Peers
For ITC Hotels, the hospitality segment is expected to show an 8% year-over-year increase in revenue and EBITDA. When including revenue from the residential business, the company’s total growth for these metrics is forecast at 22%. Management reports indicate that while April experienced a slowdown, business activity saw a recovery through May and June.
In contrast, Nomura has maintained a neutral outlook on Chalet Hotels. While the company’s Mumbai-based properties are performing well, Nomura notes performance challenges at its locations in Powai and Bangalore. The brokerage projects 10% revenue growth and 12% operating profit growth, excluding the residential segment, with commercial revenue expected to rise by 15-16%.
Phoenix Mills faces a different set of dynamics. While retail consumption is expected to climb by 25-30%, Nomura projects a 17% increase in retail income. This difference arises because newer malls in Bangalore are currently generating revenue primarily through base rentals rather than consumption-based fees. As a result, the company’s earnings may fall below consensus estimates, with overall revenue and EBITDA growth projected at 14% and 15% respectively.
Industry Risks and Monitorables
Investors should be aware of broader sector pressures identified by Nomura. The primary risks include potential demand slowdowns if international conflicts, specifically in the Middle East, escalate. Additionally, persistent high inflation remains a concern, as it can increase operational costs and put pressure on profit margins. For individual companies, the ability to sustain ADR growth and ensure timely commissioning of new properties will be key monitorables in the coming quarters.