Indian Hotels Co. Ltd.’s (IHCL) FY23 annual report reaffirms the company’s commitment to executing its ‘AHVAAN 2025’ strategy, which focuses on key pillars:— IHCL aims to reach a portfolio of 300+ hotels. The company targets a consolidated Ebitda margin of 33% by FY26E, with 35% of the Ebitda share coming from management contracts and new businesses. IHCL aims to achieve a 50:50 ratio between owned/leased and management contract room keys. And IHCL aims to retain a net cash balance sheet while pursuing its growth plans.
In FY23, driven by a robust industry-wide demand recovery and the strength of its own brand, IHCL’s consolidated revenue grew by 30% compared to FY20 (pre-Covid levels). Looking ahead, the company forecasts a long-term (LTL) revenue per available room (RevPAR) growth of 10% in FY24E and 6% in FY25E and FY26E. This growth is expected to be supported by the performance of domestic subsidiaries such as Ginger, PIEM, Benares, and United Hotels, as well as new room additions. Based on these projections, IHCL estimates a 10% revenue CAGR and a 15% Eb itda CAGR from FY23 to FY26E. The valuation of IHCL is updated to 23 times the Jun’25 EV/Ebitda, and ADD rating is maintained.
Key risks to IHCL’s outlook include the possibility of fresh waves of Covid-19 impacting the industry and a potential slowdown in discretionary consumption.
The company reiterates its commitment to reach 300+operational hotels by FY26 vs. the existing operational 263 hotels. The company intends to open at least 20 hotels in FY24 vs. 16 in FY23 and has a strong pipeline of 9,900 rooms over FY24-28, of which 74% rooms are through the asset-light management contract route. As a result, the company is targeting management contract fees of Rs 5.5bn by FY26.