Strong Q4 momentum likely to continue for Indian Hotels Company in FY26

Indian Hotels Company (IHCL) posted strong numbers in the January-March quarter (Q4) of FY25, driven by 14 per cent growth in average room rates (ARRs).

 

The Tata group hotel major reported a consolidated revenue of ₹2,420 crore (up 27 per cent year-on-year or Y-o-Y, and down 4 per cent quarter-on-quarter or Q-o-Q).

 

Earnings before interest, tax, depreciation and ammortisation (Ebitda) stood at ₹860 crore (up 30 per cent Y-o-Y, down 11 per cent Q-o-Q) in Q4FY25.

 

The quarter saw 13 per cent Y-o-Y like-for-like revenue growth with 16 per cent Y-o-Y revenue per available room (RevPAR) improvement.

 

Occupancy grew 80 basis points (bps) Y-o-Y to 79.4 per cent while management fees also went up 15 per cent to ₹170 crore in Q4.

 

The IHCL management said that momentum was good in April 2025, with 17 per cent Y-o-Y revenue growth.

 

The management’s guidance is for double-digit revenue growth in FY26 and beyond.

 

This would be aided by healthy ARR growth, higher wedding days, growth momentum in new businesses, three new-owned hotels in the first half, and a new TajSATS kitchen at Jewar airport. 

 

For subsidiaries (consolidated revenues less standalone including TajSATS), sales grew 68 per cent to ₹950 crore while Ebitda was up by 240 per cent to ₹180 crore on a Y-o-Y basis in Q4.

 

New business verticals, Ginger, Qmin, and amã Stays & Trails, grew 40 per cent Y-o-Y to ₹600 crore in FY25.

 

TajSATs posted 17 per cent growth to ₹1,050 crore in FY25. Chambers reported revenue of ₹150 crore (up 25 per cent).

 

IHCL has guided for ₹1,200 crore capex in FY26 with 60–65 per cent allocated towards renovations and digital upgrades, with the rest being for greenfield. This includes completion of a 127-Key Vivanta, an 151-key Ginger and the 100-key Taj Ganges at Varanasi.

 

Construction for the Sea Rock hotel (in Mumbai) is likely to begin in FY26-end.

 

Overall, there is likely to be an expansion of 30 new hotels in the next four years. Planned renovations in key assets include Taj Palace (Delhi), Fort Aguada in Goa, St James in the UK, and Taj Calcutta.

 

Management fee grew 20 per cent in FY25, and the number of managed hotel rooms rose 11 per cent. The current portfolio of 26,500 keys is to be supplemented by 19,500 incremental keys in the pipeline over the next 4-5 years. IHCL expects 2,959 new keys in FY26 and 3,251 new keys by FY27.

 

Hence, fee growth is likely to be high.

 

In Q4, earnings were aided by healthy improvement in ARR and consolidation of TajSATS in August 2024, which contributed ₹280 crore of revenue.

 

Adjusted for TajSATS, revenue grew 13 per cent Y-o-Y and Ebitda grew 19 per cent.

 

Key inventory increased by 937 owned keys Y-o-Y. There were better returns from Ginger and international subsidiaries.

 

IHCL closed FY25 with strong 12 per cent Y-o-Y revenue growth and 20 per cent Y-o-Y Ebitda growth (adjusted for TajSATS consolidation), driven by 12 per cent RevPAR growth. 

 

Revenue and Ebitda for FY25 stood at ₹8,300 crore (up 23 per cent Y-o-Y) and ₹2,770 crore (up 28 per cent), respectively.

 

IHCL is the largest player in India’s hospitality sector, given its salience across the mid-to-premium segments as well as presence in business and leisure locations.

 

The management expects gradual margin expansion in FY26 and beyond.

 

Apart from demand for rooms exceeding supply, growth is being driven by rising foreign tourist arrivals, increased Meetings, Incentives, Conferences, and Exhibition (MICE) activity, expanding leisure tourism, and the development pipeline.

 

IHCL’s share is highly valued, given its leading position in the hospitality sector and it is maintaining the growth momentum.

 

According to Bloomberg, 9 of the 18 analysts polled in May are bullish, 6 are neutral and 3 are bearish. Their average one-year target price is ₹857 for the stock. It closed on Tuesday at ₹753 on the BSE.