Motilal Oswal Financial Services has issued a BUY recommendation for Indian Hotels Company Limited (IHCL) with a target price (TP) of Rs 880, representing a potential upside of 17% from the current market price (CMP) of Rs 754. IHCL has outlined an ambitious growth strategy under its "Accelerate 2030" plan, which targets doubling consolidated revenues, achieving a balanced mix of traditional and new businesses, and scaling margins through operational excellence. This report emphasizes strong structural tailwinds, innovative business models, and IHCL’s leadership in RevPAR and asset management.

Motilal Oswal Recommends a BUY on IHCL

Recommendation Overview
Motilal Oswal Financial Services highlights Indian Hotels' compelling growth story backed by robust expansion plans and financial discipline. With a CMP of Rs 754, the firm maintains a BUY call and assigns a target price of Rs 880 based on FY27E sum-of-the-parts valuation.

Key Growth Drivers

Portfolio Expansion and Brand Evolution

IHCL aims to expand its portfolio to 700 hotels, with over 500 operational properties by FY30.
It will leverage its capital-light model for expansion, particularly in Tier 2/3 cities and international markets like the Middle East and South Asia.
The evolution of its brandscape—spanning Taj, Ginger, Vivanta, and boutique brands like Tree of Life—will ensure comprehensive market coverage.
New Ventures and Reimagined Businesses

Innovative businesses like Ginger, Qmin, and TajSATS are expected to grow at a 30% CAGR, contributing 25%+ to revenues by FY30.
TajSATS plans to expand its kitchen network and launch new sub-brands to meet growing catering demand.
Operational Excellence

IHCL is committed to achieving over 20% RoCE by FY30, driven by cost rationalization, digitalization, and high-margin business streams.
The company is focusing on RevPAR growth (7–10% ARR CAGR), efficient asset utilization, and operational leverage.

Financial Highlights

Revenue and Margins

Consolidated revenues are projected to grow from Rs 68 billion in FY24 to Rs 150 billion by FY30, a CAGR of ~14%.
EBITDA margins are forecasted to improve from 33.4% in FY25 to 36.6% in FY27, underpinned by an optimized revenue mix and operational efficiencies.
Profit Growth

Adjusted PAT is expected to rise from Rs 16.7 billion in FY25 to Rs 25 billion in FY27, with EPS growth of 33% YoY in FY25.
Valuations

At the current valuation of 63.9x FY25E P/E, IHCL is positioned as a premium player in the hospitality sector, supported by its strong earnings potential and innovative growth strategies.

Industry Outlook

Structural Tailwinds

Demand growth outpaces supply: Hotel demand is expected to grow at a 9–11% CAGR, while supply remains constrained at 7–8% CAGR.
Emerging trends: Wellness tourism, sustainable practices, and MICE (Meetings, Incentives, Conferences, and Exhibitions) are key growth segments, with MICE clocking an 18% CAGR.
Tier 2/3 City Focus

Limited hotel supply in Tier 1 markets ensures sustained RevPAR growth.
IHCL’s strategic focus on underpenetrated markets will enhance its competitive edge.

Growth Strategy Under Accelerate 2030

Target Metrics

Portfolio: Expand to 700 hotels, with a capital-light inventory share of 57% by FY30.
Revenue: Double consolidated revenues to Rs 150 billion and achieve enterprise revenue of Rs 300 billion by FY30.
Profitability: Focus on maintaining EBITDA margins above 36%.
Capital Allocation

Allocate Rs 50 billion over five years for new projects, renovations, and digital upgrades.
Maintain a balanced strategy of dividends, capex, and inorganic growth opportunities.

Valuation and Recommendation

Target Price and Upside
Motilal Oswal values IHCL at a target price of Rs 880, implying an upside of 17% from the current levels. The valuation incorporates robust FY27 EBITDA estimates, ARR growth, and a strong hotel pipeline.