Indian Hotels renovations and domestic travel drive Q1 FY27 RevPAR growth

Investment View and Key Drivers

In its July 22, 2026 result update, Anand Rathi Research retained its BUY view on Indian Hotels Company (IHCL) after a resilient Q1 FY27 performance. Global macroeconomic uncertainty and the West Asia conflict affected international business and flight connectivity, but resilient domestic travel enabled continued momentum. The broker believes the hotel industry is moving from a hypergrowth phase to stable, sustainable growth.

Anand Rathi expects IHCL to deliver like-for-like RevPAR growth of about 8-10 per cent, supported by renovation-led average room rate expansion and acquisitions enabled by its cash position of about Rs 4,440 crore.

Q1 FY27 Financial Performance

Reported Q1 FY27 consolidated revenue rose 14.6 per cent year-on-year to Rs 2,339 crore, while standalone revenue grew 17.9 per cent to Rs 1,230 crore. Consolidated revenue was 2.3 per cent above Anand Rathi's estimate and 1.8 per cent above street expectations.

Renovation Benefits and Operating Outlook

Management expects the strong operating momentum to continue through Q2 FY27 and FY27. Anand Rathi highlights the completion of most of IHCL's approximately Rs 2,000 crore renovation programme over the preceding two years. Major upgrades undertaken in October 2025 included Taj Palace Hotels in New Delhi, Taj Fort Aguada in Goa, President Hotel in Mumbai, Taj Bengal in Kolkata and Taj West End in Bengaluru.

The broker considers Q1 FY27 RevPAR growth to be early evidence of the benefits from these renovations.

Hotel Portfolio and Asset-Light Strategy

IHCL operated 382 hotels and 33,609 keys at the end of Q1 FY27. Management-contract rooms represented 55 per cent of IHCL and group rooms, reflecting the broker's noted asset-light approach.

Taj was the largest brand, with 93 operational hotels and 13,633 keys, while Ginger had 166 hotels and 10,410 keys.

Earnings Estimates and Growth Forecasts

Following the quarterly outperformance, Anand Rathi raised its FY27E and FY28E EBITDA estimates by 3.7 per cent and 9.0 per cent, respectively.

• Revenue growth of about 15 per cent CAGR over FY26-FY28E.
• Average room rate growth of 8-10 per cent.
• FY28E occupancy of about 72.1 per cent.
• EBITDA margin expansion to 35.5 per cent in FY28E from 32.6 per cent in FY26.
• EPS CAGR of about 21.4 per cent over FY26-FY28E.

The broker expects future margin expansion to be predominantly revenue-led, as much of the operating leverage from lower employee, power and fuel costs has already played out.

Valuation, Target Price and Risks

Anand Rathi revised its target price to Rs 845 from Rs 765, valuing IHCL excluding JVs and associates at about 26 times FY28E EBITDA. The valuation uses FY28E EBITDA of Rs 4,438 crore and incorporates net debt and minority interest adjustments. The revised target implied 15.4 per cent upside from the report's Rs 732 share price.

Key risks: Weaker demand resulting from an economic slowdown, along with external disruptions such as terrorist attacks and epidemics.