Indian Hotels – The Best Is Yet To Come: ICICI Securities

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In May 2022, The Indian Hotels Company Ltd. had unveiled its ‘Ahvaan 2025’ strategy which essentially focuses on four key pillars including:

  1. reaching a total of 300 plus 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.

In H1 FY23, buoyed by industry tailwinds and company’s own brand strength and cost savings initiatives, Indian Hotels’ H1 FY23 consolidated revenue has grown by 23% over H1 FY20 (pre-Covid) levels to Rs 25.0 billion with H1 FY23 Ebitda growing 100% over H1 FY20 levels to Rs 6.7 billion with H1 FY23 domestic average room rate up 32% and revenue per available room up 35% compared to H1 FY20 levels.

With demand momentum sustaining in Q3 FY23 as well with strong leisure demand and increased business travel, we expect Indian Hotels to clock H2 FY23 revenue of Rs 27.4 billion with an Ebitda of Rs 9.6 billion (not comparable to H2 FY20 owing to Covid impact from Feb-20 onwards).

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