INDHOTEL - Indian Hotels Co. Ltd Share Price

The management of The Indian Hotels Company Limited (IHCL) presented an optimistic outlook during the Q3 FY 2025-26 earnings call. Key points highlighted include:

1. Continuing Growth Momentum: IHCL maintained record performance for the 15th consecutive quarter. Consolidated revenue rose 12% year-on-year to INR 2,900 crores, while EBITDA grew 11% to INR 1,134 crores, leading to an EBITDA margin of 39.1%. The consolidated PAT, before exceptional items, increased by 15% to INR 668 crores.

2. Revenue Drivers: The ongoing strength in core business is supported by favorable demand-supply dynamics in key markets, along with a focus on asset management. Management fees are expected to grow in the high teens, driven by over 60 new openings in FY'27.

3. Pipeline and Expansion: IHCL has a robust pipeline with 30,200 keys under development, nearly matching its current operational capacity of 32,300 keys. Approximately 80% of this pipeline will be managed under a capital-light model, enhancing visibility on earnings growth with minimal balance sheet stress.

4. Strategic Acquisitions: The acquisition of brands such as Atmantan and Brij is anticipated to add INR 250-300 crores to the consolidated topline in FY'26-"˜27, enriching IHCL's portfolio in mid-scale and wellness segments.

5. Future Projections: Management anticipates double-digit revenue growth for FY'26 and FY'27, driven by sustained margins, strong like-for-like momentum, and a disciplined approach to capital allocation. They expect like-for-like revenue growth to continue, alongside improvements from new business verticals.

6. Significant Project Insights: Taj Bandstand is projected to contribute over INR 1,000 crores to topline upon stabilization, with an anticipated EBITDA margin around 50%.

Management closes the outlook with a positive note on the ability to maintain strong growth and profitability while effectively managing its diversified portfolio and investing in core competitive advantages.

Here are the major questions asked during the Q&A section of the earnings call transcript, along with detailed answers:

1. Question from Shaleen Kumar: "Can you get a sense of the contribution of ARR growth/occupancy in the 9% RevPAR growth?"

   Answer by Puneet Chhatwal: The majority of the RevPAR growth is driven by Average Room Rate (ARR). Specifically, ARR increased by approximately 7%, contributing to the overall 9% RevPAR growth. At Taj, the increase was 8% with a base of INR 22,000. Brands like Vivanta and Gateway saw 10%, while Ginger reported around 9%.

2. Question from Shaleen Kumar: "How is the 4Q going on in terms of RevPAR?"

   Answer by Puneet Chhatwal: I anticipate that RevPAR growth will be similar to or even slightly higher than the previous quarter, with expectations of double-digit growth. I project revenue growth to be between 12% to 14% for Q4, aligning with historical performance trends.

3. Question from Shaleen Kumar: "Can you provide insights on Atmantan's business model and expansion plans?"

   Answer by Puneet Chhatwal: In the short term, we plan to grow Atmantan through a hybrid model, targeting 4 projects, 2 of which will be capital light. We aim to establish one site on the west coast, one in Kerala, and perhaps additional locations in the south and north. We expect its margins to comfortably stay above 40%.

4. Question from Prateek Kumar: "Can you quantify the one-off expenses impacting margins this quarter?"

   Answer by Puneet Chhatwal: The one-off expenses this quarter are estimated at around INR 20 to 25 crores. These costs stem from acquisitions, including legal and technical fees, as well as some associated GST expenses which should neutralize in the next quarter.

5. Question from Karan Khanna: "Can you clarify the revenue potential and stabilization timelines for the Taj Bandstand project?"

   Answer by Puneet Chhatwal: We expect Taj Bandstand to stabilize within 3 years, aiming for ARR around INR 38,000 to 40,000 at 78% to 80% occupancy. We project potential revenue of over INR 1,000 crores upon stabilization, growing at 10% annually thereafter.

6. Question from Sreetika: "How much of the international RevPAR growth do you attribute to currency impacts?"

   Answer by Ankur Dalwani: The currency impact contributed about 1.5% to 2% to the RevPAR of our international hotels. The growth in RevPAR is primarily structural, driven by improvements in demand in markets like San Francisco, New York, and Cape Town.

7. Question from Sameet Sinha: "Will the 12% to 14% revenue growth persist into next year?"

   Answer by Puneet Chhatwal: Yes, I confirm that this revenue growth rate is sustainable and will carry into the next financial year. We believe our expansion efforts and new openings will continue to support this goal.

These responses highlight significant numbers and strategic insights into the company's performance and future directions.