Indian Hotels Company Ltd. share price target

Indian Hotels Co. Ltd.’s (IHCL) FY22 Annual Report reiterates the company’s plans to execute its “AHVAAN 2025” strategy which essentially focuses on four key pillars including: 1) reaching a total of 300+ hotels across the portfolio, 2) clocking a consolidated EBITDA margin of 33% by FY26E with 35% EBITDA share from management contracts and new businesses, 3) achieving a 50:50 ratio between owned/leased and management contract room keys and 4) retaining a net cash balance sheet while pursuing its growth plans.

At the outset we note that Indian Hotels (IHIN) has delivered profits after six consecutive quarters of losses. IHIN's standalone RevPAR surged 1.9x YoY and 62% QoQ owing to significant growth in ARR as well as occupancy. The higher demand in leisure segment as well as recovery in business travel has driven overall growth. Additionally, IHIN's operating performance was strong because of operating leverage and cost-saving measures. Revenue/EBITDA for 3QFY22 came in above our estimates. Factoring in the same, we increase our EBITDA estimates for FY22 by 20% and largely retain for...

Another quarter of strong recovery in RevPAR After an initial hiccup in Q1FY22 due to second wave of Covid-19, the company has shown strong recovery in both occupancy and ADR in Q2FY22. For domestic operations, the company's occupancy improved by 2,430bps YoY to 56.6%, while ADR was higher by 52% YoY to Rs8,273. This resulted in 2.5x jump in RevPAR to Rs4,679 in Q2FY22 in the domestic operations. Prudent cost management supported operating margin The company's effective cost management initiatives led to EBITDA of Rs723mn in...

Indian Hotels (IHIN)'s standalone RevPAR nearly doubled on a QoQ and YoY basis owing to ARR growth and occupancy improvement. This came on the back of positive consumer sentiment on travel, leisure travel led recovery, and the resumption of business travel. Additionally, IHIN's operating...