Indian Hotels Shares Rise 2% Following Morgan Stanley's 'Overweight' Rating

Shares of Indian Hotels Company Limited (IHCL) rose by 2% to ₹776 during morning trade on February 21, continuing their upward momentum for the fifth consecutive session. The rally followed Morgan Stanley's reaffirmation of its ‘overweight’ rating on the stock, along with a target price of ₹856.

At around 9:20 AM, IHCL share price was trading at ₹775, reflecting a 1.8% increase from the previous close on the National Stock Exchange (NSE). Morgan Stanley’s target price implies a potential 12.5% upside from IHCL’s last closing price of ₹761. Despite the recent positive trend, the stock has witnessed a 13% decline since the beginning of the year.

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Strong Industry Support and Market Trends

Morgan Stanley analysts emphasize IHCL’s robust positioning in Mumbai’s hospitality sector. In January, revenue per available room (RevPAR) grew by 21% in both Mumbai and Delhi, a significant increase compared to the previous year’s 18% and 11% growth, respectively. The ongoing strength in key markets is expected to contribute to further revenue expansion.

The hospitality industry in India has been experiencing steady growth, driven by an increase in both domestic and international travel. Rising disposable incomes, a surge in business conferences, and a booming wedding industry have fueled demand for premium hotels. IHCL, being one of the country’s largest hospitality chains, has benefited from these tailwinds.

Strong Financial Performance in Q3 FY24-25

IHCL reported an impressive third-quarter performance for FY24-25, with a 29% year-on-year increase in profit, primarily due to strong revenue growth and improved margins.

For the quarter ending December 31, 2024, IHCL’s consolidated revenue surged by 29% to ₹2,592 crore. The company's EBITDA rose by 32% to ₹1,020 crore, while the EBITDA margin expanded by 80 basis points to 39.4%. The profit after tax (PAT) stood at ₹582 crore, marking a 29% increase compared to the same period last year.

IHCL's financial performance reflects its strategic expansion and operational efficiency. The company has been actively investing in new properties, strengthening its brand presence, and enhancing customer experiences through premium offerings.

CEO’s Outlook on Future Growth

Puneet Chhatwal, Managing Director & CEO of IHCL, attributed the company’s revenue growth to a 40% rise in New Businesses and strong double-digit growth in its existing properties. He emphasized that the sector remains poised for further growth in the coming quarters, supported by large-scale regional events, destination weddings, and increased transient travel.

"The demand for luxury and premium hospitality services continues to rise, and IHCL is well-positioned to capitalize on this trend. We are focused on expanding our portfolio, improving operational efficiencies, and enhancing guest experiences," Chhatwal stated.

Expansion Plans and Future Prospects

IHCL has been aggressively expanding its footprint, with several new properties in the pipeline across India and international markets. The company is focusing on asset-light models, management contracts, and strategic partnerships to drive long-term growth.

Analysts believe IHCL’s growth trajectory remains strong, given its leadership position in the Indian hospitality sector and its ability to adapt to changing consumer preferences. With India’s tourism sector on the rise and business travel gaining momentum, IHCL’s long-term outlook remains promising.

As the company continues to build on its strong fundamentals and strategic initiatives, investors will be closely watching its next moves in the hospitality industry.