Target: ₹366
CMP: ₹333.85
In May’22, Indian Hotels Co. Ltd. (IHCL) had unveiled its “Ahvaan 2025” strategy which essentially focuses on four key pillars including: reaching a total of 300+ hotels across the portfolio, clocking a consolidated EBITDA margin of 33 per cent by FY26 with 35 per cent EBITDA share from management contracts and new businesses, achieving a 50:50 ratio between owned/leased and management contract room keys and retaining a net cash balance sheet while pursuing its growth plans.
In H1FY23, buoyed by industry tailwinds and company’s own brand strength and cost savings initiatives, the company’s H1FY23 consolidated revenue has grown by 23 per cent over H1FY20 (pre-Covid) levels to ₹2,500 crore with H1FY23 EBITDA growing 100 per cent over H1FY20 levels to ₹670 crore with H1FY23 domestic ARR up 32 per cent and RevPAR up 35 per cent compared to H1FY20 levels.
With demand momentum sustaining in Q3FY23 as well with strong leisure demand and increased business travel, we expect IHCL to clock H2FY23 revenue of ₹2,740 crore with an EBITDA of ₹960 crore (not comparable to H2FY20 owing to Covid impact from Feb’20 onwards).
We retain our Add rating on IHCL with a revised SoTP-based target price of ₹366/share (earlier ₹351).