Indian Hotels Company needs H2 to turn the key and restart the stay

Indian Hotels Company needs H2 to turn the key and restart the stay

Don't want to miss the best from Business Standard?

At the consolidated level, Q2FY26 revenue grew 12 per cent, though most of that came from subsidiaries; standalone growth was capped at 2 per cent. Key operating indicators — RevPAR, average room rate (ARR), and occupancy — were flat or lower Y-o-Y. ARR slipped 1 per cent to ₹14,234, and standalone occupancy stayed at 78 per cent.

 

Food and beverage sales inched up 2 per cent, while other services rose 9 per cent. Management fees grew 24 per cent over the year-ago period.

 

Despite a soft top line, operating profit rose 8 per cent Y-o-Y, with margins widening by 170 basis points to 35 per cent, supported by continued cost-control efforts.

 

A key driver for the rest of the year is the addition of new hotels. IHCL is on course to open 3,000 rooms, with 18 launches planned in H2FY26 compared to 12 in H1. Of these, 504 rooms fall under the owned portfolio, with the remainder managed under contract.

 

ICICI Securities has a ‘buy’ call and expects a clear recovery in H2FY26. Analysts Kaustubh Pawaskar and Abhishek Shankar say room demand, expected to grow 10 per cent Y-o-Y, should stay ahead of room supply at 8 per cent. They also underline the addition of greenfield (new) rooms in key markets and steady growth in management fee income, which together could lift consolidated revenue at an annual pace of 16 per cent from 2024–25 to 2027–28. The brokerage has a target price of ₹915.

 

Renovated properties — including Taj Palace in Delhi, Taj Fort Aguada Resort & Spa in Goa, President SeleQtions in Mumbai, and Taj Lake Palace in Udaipur — are another catalyst. Meetings, incentives, conferences, and exhibitions (MICE) activity and a fuller wedding calendar are also expected to add support.

 

The fully upgraded portfolio is expected to command room rates 12–15 per cent higher, with the impact showing up from the third quarter (October–December) of FY26 and the full benefit visible in 2026–27. Higher demand in the current peak season should lift occupancies as well.

 

Elara Securities has raised the stock to a ‘buy’ with a target price of ₹896, citing double-digit RevPAR growth, owned-portfolio expansion, steady growth in management fee income driven by new assets, portfolio enrichment, brand additions, faster scale-up of new businesses, and healthy double-digit revenue growth. 

Indian Hotels Company (IHCL), the country’s largest listed hospitality chain, saw a muted second quarter (July–September/Q2) and first half (H1) of 2025–26 (FY26), held back by a high base, renovation-related closures, heavy rainfall, and global uncertainty. Brokerages, however, expect the second half (H2) to look far better, helped by the wedding season, room additions, and stronger seasonal travel.

 

The stock, now trading at ₹738, has lagged over the past year. It has slipped 7 per cent during this period, while peers such as EIH and Lemon Tree have delivered 5.4 per cent and 24.7 per cent returns, respectively. ITC Hotels has gained 19.6 per cent since its January listing.

  

IHCL’s standalone revenue rose 7 per cent year-on-year (Y-o-Y) in H1FY26. The hotel business softened due to global worries, rain-related disruptions, last year’s event-led high base, and reduced inventory as more than 200 rooms were shut for renovation.

 

The company says H2FY26 should mark a clear turnaround, with double-digit growth in revenue per available room (RevPAR) supported by firm room demand and an active wedding season. With the refurbished 200 rooms back in service and another 278 new rooms being added, revenue growth in the second half is expected to move into double digits.