ICICI Securities has reiterated its 'Buy' rating for Indian Hotels Company Ltd. (IHCL) shares, forecasting a 28% upside potential. The brokerage has set a target price of Rs 925, valuing the stock at 30 times its estimated June 2028 EV/EBITDA, citing robust demand and a significant pipeline of new projects.
Resilient Performance in Q1 FY27
Despite various geopolitical disruptions, Indian Hotels demonstrated a resilient performance in the first quarter of fiscal year 2027. The company reported a consolidated revenue growth of 15% and an EBITDA increase of 17% for the June quarter. Domestic like-to-like revenue per available room (RevPAR) also saw a healthy 14% growth during this period.
Strong Growth Drivers and Future Outlook
As of June 2026, Indian Hotels had approximately 33,600 operational keys, with an additional 32,600 keys in the pipeline slated to open over the next four to five years. ICICI Securities anticipates that this strong room pipeline, coupled with high single-digit industry RevPAR growth and increasing contributions from new businesses and management fees, will fuel mid-teen revenue and EBITDA growth in the medium term.
The brokerage projects a 12% revenue Compound Annual Growth Rate (CAGR) and a 15% EBITDA CAGR for Indian Hotels between FY26 and FY29, based on an assumed 7% like-to-like RevPAR growth. Furthermore, management fees are expected to grow at a 19% CAGR, reaching Rs 1,160 crore by FY29.
Proposed Merger and Financial Strength
ICICI Securities also highlighted the proposed merger of Oriental Hotels Ltd with Indian Hotels through an all-stock scheme of arrangement. The transaction suggests an exchange ratio of 25 Indian Hotels shares for every 117 Oriental Hotels shares, with completion targeted for the second half of FY28, pending statutory approvals.
Oriental Hotels operates a portfolio of seven hotels, totaling 825 rooms, including prominent properties like Taj Coromandel and Taj Malabar Resort & Spa. This merger is expected to simplify the group's holding structure and increase Indian Hotels' direct ownership across several entities. The company's strong financial position, with a net cash position of Rs 4,400 crore as of June 2026, further supports its growth initiatives.