Indian Hotels Company Stock Tumbles 5% After Q2FY26 Results Disappoint

The stock price of Indian Hotels Company Limited (IHCL), a Tata Group company, hit a five-month low, falling by 5% to ₹707.20 on the BSE during intra-day trade. This downturn occurred as the company announced its financial results for the second quarter of the financial year 2025-26 (Q2FY26), accompanied by significant trading volumes.

IHCL reported a consolidated revenue growth of 12% year-on-year (YoY) to ₹2,041 crore, which was largely in line with market expectations. However, the hotel business revenue grew by a modest 6%, while the air catering business saw a 14% rise. The subdued single-digit revenue growth in the hotel segment was attributed to a high base from the previous year, fewer social/wedding days, and adverse weather conditions like heavy rainfall in certain regions during the quarter. Room revenue decreased by 3%, and food & beverage revenue grew by only 2%. Revenue Per Available Room (RevPAR) remained almost flat at around ₹11,000.

Consolidated EBIDTA margins improved by 49 basis points YoY to 27.9%, meeting street expectations. EBIDTA increased by 14% YoY to ₹570.1 crore. The hotel business operating EBIDTA margins improved by 80 basis points to 28.7%, but air catering EBIDTA margins decreased by 40 basis points to 23.3%. Profit before tax grew by 17% YoY to ₹452.7 crore. However, due to a higher incidence of tax, the profit after tax saw a 3% decline, settling at ₹316 crore.

Impact: This news directly impacts IHCL's stock valuation and investor sentiment, potentially affecting its short-term trading performance. However, analyst views suggest confidence in medium to long-term growth, which might mitigate the immediate negative impact. The overall hospitality sector in India could see some sentiment influence, though IHCL's performance is also company-specific. Rating: 6/10.

Difficult Terms Explained: Q2FY26: This refers to the second quarter of the financial year 2025-2026, typically covering the months of July, August, and September 2025. YoY: Year-on-year. This metric compares the current period's performance with the performance of the same period in the previous year. EBIDTA: Earnings Before Interest, Taxes, Depreciation, and Amortization. It is a measure of a company's operating performance before accounting for financing costs, taxes, and non-cash expenses. RevPAR: Revenue Per Available Room. It is a key performance indicator in the hotel industry, calculated by dividing the total revenue from room rentals by the total number of available rooms.

Brokerage Views: Brokerages like JM Financial Institutional Securities maintain an 'ADD' rating with a target price of ₹835, expecting a 12-15% CAGR in revenue/EBITDA over FY25-28. ICICI Securities considers IHCL a preferred pick in the hospitality space, noting that the Q2 performance doesn't reflect the full year's potential and management is confident about achieving double-digit revenue growth. Motilal Oswal Financial Services reiterates a 'BUY' rating with a target price of ₹880, citing a strong pipeline of room additions and favorable market dynamics.