Indian Hotels reported strong consolidated performance in the September quarter (Q2FY27) as domestic demand stayed resilient. Revenue growth of 22 per cent topped analysts' estimates, driven by a 27 per cent spurt in revenue per available room. The company upgraded its FY27 revenue growth guidance after seeing strong demand and property upgrades.
Led by strong performance in the standalone business, the country's largest listed hotel chain, Indian Hotels, reported a robust consolidated performance in the September quarter (Q2FY27).
Domestic demand stayed resilient during the quarter and was supported by large meetings, incentives, conferences and exhibitions (MICE) events, such as the BRICS Summit. Further, there was a revenue and occupancy boost following renovations at its marquee hotels across the country.
The company has upgraded its FY27 revenue growth guidance following the strong showing in H1FY27 and revenue growth visibility in the seasonally strong quarters in the second half of FY27.
The stock, which is trading at ₹781, has gained about 23 per cent over the past six months. Given the outlook and target prices, there is some more steam left in it.
Consolidated revenue growth of 22 per cent topped analysts' estimates by a wide margin and was driven by a 27 per cent spurt in revenue per available room (RevPAR).
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This growth was driven by a combination of a 700-basis-point expansion in occupancy and 17 per cent growth in average room rates. Occupancy improved from 75 per cent to 82 per cent, while management fees grew 16 per cent year-on-year (Y-o-Y).
The strong rise in room rates was largely on account of robust demand, major events and property upgrades, which led to stronger pricing power.
Elara Research believes the classic demand-supply mismatch will drive RevPAR growth over the next 18 months, given accelerated demand growth.
New hotel signings remain strong, and the company continues to cash in on sustained demand momentum through industry-leading hotel openings, according to analysts led by Prashant Biyani of the brokerage.
They have a 'buy' rating and have raised their target price from ₹786 to ₹922.
Consolidated operating profit grew 24 per cent, while margins expanded by 50 basis points Y-o-Y to 28.4 per cent.
The gains were driven by the standalone operating profit margin, which stood at 38.9 per cent compared with 34.9 per cent in Q2FY26.
Standalone margins improved on account of operating leverage from higher occupancy and a higher flow-through from management fees.
However, the operating profit of its airline catering business, TajSATS, declined 25 per cent Y-o-Y on account of weaker air traffic due to disruptions in West Asia.
The cumulative performance of subsidiaries was also weaker due to renovations and disruptions following the West Asia conflict.
360 ONE Capital Research said that while temporary softness in air traffic weighed on TajSATS and should recover gradually, a robust hotel pipeline and asset-light expansion strategy remained supportive of medium-term growth.
Analysts led by Pulkit Chawla of the brokerage remain constructive on the domestic hospitality sector, backed by favourable demand-supply dynamics and sustained pricing power.
The brokerage has maintained a 'buy' rating with a revised target price of ₹920, up from ₹880.
Motilal Oswal Research, too, remains optimistic about the company's growth outlook despite near-term geopolitical and macroeconomic uncertainties, led by healthy traction in the core business as well as new and reimagined businesses.
Analysts led by Sumant Kumar of the brokerage expect the strong momentum to continue in the medium term, supported by a strong room addition pipeline in owned and managed hotels (6,650 and 28,150 rooms, respectively), strategic acquisitions, continued favourable demand-supply dynamics and increasing MICE activities in India.
The brokerage has a 'buy' rating with a target price of ₹870.