Indian Hotels shares: IHCL climbs 4% today; should you buy, hold or sell this Tata stock?

Shares of Indian Hotels Co Ltd (IHCL) climbed 4 per cent at open, as the Tata group firm's reported better-than-expected September quarter results following a soft June quarter. Analysts said the quarter saw a strong rebound, driven by strong wedding-led demand in Mumbai, along with the release of pent-up demand that was delayed due to elections and weather disruptions in Q1.

IHCL’s Q2 revenue grew at 27 per cent, driven by healthy occupancy (77 per cent, up 3 per cent YoY) and strong ARR growth of 9 per cent YoY, resulting in RevPAR growth of 12 per cent YoY at the consolidated domestic level. Ebitda margin expanded 270 bps YoY to 27.5 per cent.

Add to that October saw strong growth of 16.5 per cent YoY (Hotel segment) and multiple wedding dates over the next two months should aid growth, Emkay Global said.

"Over the medium term, favorable demand-supply dynamics act as tailwinds for the business. IHCL’s diversified revenue stream, operational efficiency, and strong balance sheet keep the company in good stead. Our FY25-27E Ebitda gets a boost of 7-13 per cent from the consolidation of Taj SATS and factoring in the Q2 performance. We maintain ADD with a target price of Rs 700," it said.

The stock climbed 4.15 per cent to hit a high of Rs 712 on BSE. With this, the scrip is up 10 per cent year-to-date.

Antique Stock Broking said the company expects demand to remain robust in H2 and maintains its guidance of achieving a double-digit growth rate in FY25. "Following the results, we are keeping our estimates largely unchanged, but we have increased the target price to Rs 700 from Rs 640 as we roll over our valuation EV/Ebitda multiple to FY27," it said.

HDFC Institutional Equities said the supply- demand mismatch will continue to favor IHCL in key locations for the next few years, supporting a high single-digit RevPAR CAGR until FY27. The ramp-up of newly opened hotels and a robust pipeline of new hotels will benefit from demand tailwinds, it said.

"We believe the upcoming wedding season, with 4.8 million weddings, along with a revival in foreign tourist arrivals, will boost H2FY25 performance. We incorporate the consolidation of Tajsats and upgrade EPS for FY25 and FY26 by 7 per cent each. We maintain our REDUCE and revised target price to Rs 550," it said.