ICICI Securities upgrades Indian Hotels to ‘buy’; stock jumps over 7%
ICICI Securities has upgraded hospitality company Indian Hotels from ‘hold’ to ‘buy’. The firm sees an upside potential of 21%, setting the target price at ₹640 per share.“With the stock price correcting ~10% in the last three months, we upgrade IHCL to BUY, from Hold, with a revised TP of INR 640 (earlier INR617), rolling forward to 26x Jun’26E EV/EBITDA," the firm said in a note.Indian Hotels stock rose as much as 7.49 per cent on Wednesday's trading session.
The shares of the hospitality company closed at ₹570 on June 5, against the previous close at ₹530.30.Also read: It takes market about one week after poll results to revert to pre-election levels, says JPMorgan. The brokerage firm also estimates an 18 per cent EBITDA CAGR over FY24-27.
“We introduce our FY27 estimates and build in 14 per cent revenue CAGR and 18 per cent EBITDA CAGR over FY24-27E. Of this, we expect 8–10 per cent annual EBITDA growth from existing assets with balance growth driven by the commencement of new hotels, of which over 75 per cent of the room openings will be through asset-light management contracts," it said.The company's demand outlook also looks promising.
With occupancy and room rates seen in FY24, RevPAR growth is likely to stay healthy in FY25, too.Also read: Vodafone Idea shares rise 13% after Care upgrades long-term ratings.“With industry forecasts suggesting double-digit demand CAGR over FY24–28E vs. supply CAGR of 7–8%, IHCL feels that ARR trajectory is northbound in the medium term.
Hence, it remains confident in the double-digit console. Revenue growth in FY25 with new businesses expected to grow >30% YoY alongside asset management driving profitability via a mix of premiumisation of offerings and optimisation of costs," it
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