Explained: Why brokerages are bullish on this Tata group-owned hotel stock

Indian Hotels share price today

 

Shares of Indian Hotels Company (IHCL) moved higher by 3 per cent to ₹767.75 on the BSE today, boosted by a healthy business outlook.

 

In the past three trading days, Indian Hotels shares have rallied 5 per cent after the Tata group-owned hotel company entered into a strategic partnership, signing definitive agreements to acquire controlling stake in ANK Hotels Pvt Ltd and Pride Hospitality Pvt Ltd, coupled with signing a distribution agreement with Brij Hospitality Pvt Ltd.

 

Despite the recent stock rally, however, IHCL stock has underperformed the market thus far in the current calendar year 2025, falling 12 per cent during the period as compared to a 2.6-per cent rise in the BSE Sensex.  FOLLOW STOCK MARKET LIVE UPDATES TODAY

 

IHCL enters into a strategic partnership for over 150 hotels in India

 

Recently, IHCL said it has acquired 51 per cent stake in ANK Hotels and Pride Hotels for ₹204 crore.

 

As per the deal with ANK and Pride Hotels, the company will add 135 hotels and 6,800 keys to its portfolio from the acquisition. Out of the 135 hotels, 125 hotels will be under management contracts while 10 hotels will operate under leases and after the completion of the acquisition, all the hotels will be transitioned and repositioned into Ginger Brand.

 

The recent addition will also take IHCL's mid-scale hotel inventory to over 240 hotels from 105 hotels at present. The repositioning will unlock cost and operational synergies as there is 30 per cent market overlap between 'Ginger' and 'Clarks', which means there will be two 'Ginger' hotels in the same location. Also, 70 per cent of the acquired hotels are in new geographies which will help in scaling of the 'Ginger' brand. The management targets more than 500 nGinger hotels in the medium term with a long-term outlook of 1,000 hotels.

 

The management expects the acquired entities to contribute revenues of ₹100 crore and Ebitda of ₹60 crore on a consolidated basis (including ₹20 crore fees) in FY30, ICICI Securities said in a note.

 

That apart, the management has guided for a strong performance in Q2FY26 despite a high base of Q2FY25 due to five auspicious wedding dates. Further, it has maintained a double-digit revenue growth guidance for FY26 aided by strong demand across all segments and by continued momentum in MICE activity, high profile diplomatic visits, and accelerated hotel openings.

 

Indian Hotels stock outlook

 

Favourable industry dynamics with room demand expected to grow by 6-7 per cent ahead of supply growth of 3-4 per cent will help large hotels like IHCL to achieve double digit earnings growth in the near term.

 

"Further, strong cash generation will fuel the steady expansion through organic and inorganic initiatives," ICICI Securities had said in its Q1 result update report. It has a 'Buy' rating on the stock with a share price target of ₹950, valuing at 32x its FY27E EV/Ebitda.

 

"With room demand expected to exceed supply, domestic performance would be strong in the coming years. This, along with a likely recovery in international properties and higher contribution from new ventures, will aid revenues and PAT clock a compounded annual growth rate (CAGR) of 14 per cent and 22 per cent over FY25-27E. Multiple cost-saving initiatives and operating leverage will aid improvement in margins," according to Mirae Asset Sharekhan.

 

Higher demand from domestic leisure travellers, recovery in foreign tourist arrivals (FTAs) and a revival in corporate travels will keep room demand high for hotel companies (also help in achieving higher room rentals) in the short to medium term, the brokerage firm said.