Indian Hotels domestic RevPAR growth and asset-light pipeline support FY27 momentum

Investment View and Key Drivers

Motilal Oswal Financial Services retained its Buy recommendation on Indian Hotels in its July 21, 2026 results update. The broker cited sustained domestic travel demand, favourable demand-supply conditions, asset-light expansion and growth in new businesses.

The broker expects Indian Hotels to deliver revenue, EBITDA and adjusted PAT CAGRs of 14 per cent, 17 per cent and 20 per cent, respectively, over FY26-28. FY27 growth of 12-14 per cent is expected to be supported by leisure demand, management contracts and brands including Ginger, Qmin, ama Stays & Trails and Tree of Life.

Motilal Oswal's target price is Rs 870, compared with the CMP of Rs 732. The target is based on a sum-of-the-parts valuation comprising 28 times FY28 EBITDA for Indian Hotels excluding joint ventures and associates, the value of its Oriental Hotels stake at a 20 per cent discount to market capitalisation, and TajSATS valued at 40 times PAT.

1QFY27 Financial Performance

Indian Hotels reported consolidated 1QFY27 revenue of Rs 2,340 crore, up 15 per cent year on year and in line with Motilal Oswal's estimate. Hotel-segment revenue rose 17 per cent to Rs 2,050 crore, while TajSATS revenue grew 3 per cent to Rs 290 crore.

Consolidated EBITDA increased 17 per cent year on year to Rs 670 crore, in line with estimates. The EBITDA margin expanded 54 basis points year on year to 28.8 per cent, ahead of the broker's 28.4 per cent estimate. Adjusted PAT rose 21 per cent to Rs 360 crore and was in line with expectations.

Standalone and Subsidiary Trends

Standalone revenue and EBITDA increased 18 per cent and 31 per cent year on year to Rs 1,230 crore and Rs 480 crore, respectively. Like-for-like RevPAR increased 14 per cent. Food and beverage revenue rose 9 per cent, other-services income increased 41 per cent, and management-fee income grew 20 per cent.

Subsidiary revenue rose 11 per cent to Rs 1,100 crore, but subsidiary EBITDA declined 8 per cent to Rs 190 crore. UOH and St. James revenue grew 4 per cent and 1 per cent, respectively. UOH EBITDA was flat, while St. James EBITDA fell 25 per cent.

New business verticals, comprising Ginger, Qmin and ama Stays & Trails, grew 22 per cent year on year to Rs 190 crore in consolidated revenue.

Domestic Demand and FY27 Outlook

Management said domestic demand was the principal growth driver, offsetting softer international trends in Dubai, Maldives, the US and London. Domestic like-for-like RevPAR rose 14 per cent year on year. Revenue increased 27 per cent in Rajasthan and 29 per cent in Goa, while Mumbai, Delhi and Bengaluru grew 12 per cent, 12 per cent and 13 per cent, respectively.

Management retained its guidance for double-digit FY27 revenue growth and expects a high-teens CAGR in management-fee income. It said 1QFY27 momentum should extend into 2QFY27.

Near-term concerns include international leisure, weak airline traffic, slower government MICE activity, and geopolitical and macroeconomic uncertainty.

Expansion Pipeline and Capital Allocation

Indian Hotels had 645 hotels and a pipeline of 263 hotels after 20 signings and 11 openings in 1QFY27. The total keys pipeline stood at 32,500, compared with 33,609 operational keys, with 81 per cent of the signed pipeline being asset-light.

Ginger had more than 260 hotels, including around 95 in the pipeline. Fifteen ANK Hotels and Pride Hospitality properties migrated to Ginger during the quarter. Management is also seeking to convert selected management contracts into revenue-sharing arrangements.

Indian Hotels held gross cash of about Rs 4,400 crore, supporting renovations, expansion and potential inorganic acquisitions. Planned project capex of around Rs 300 crore covers Taj Lucknow, Gateway Calicut and Blue Diamond Pune, while routine annual capex is guided at Rs 500-600 crore.

Estimates and Valuation

Motilal Oswal broadly maintained its FY27E and FY28E revenue estimates at Rs 11,104 crore and Rs 12,605 crore, respectively. It reduced EBITDA estimates by 2 per cent and 1 per cent to Rs 3,628 crore and Rs 4,342 crore, respectively. Adjusted PAT estimates were reduced by 2 per cent each to Rs 2,175 crore and Rs 2,721 crore.

The broker's Rs 870 target price is based on 28 times FY28 EBITDA for Indian Hotels excluding joint ventures and associates, the value of its Oriental Hotels stake at a 20 per cent discount to market capitalisation, and TajSATS valued at 40 times PAT.