1:10 Split: Tata's 122-Year-Old Hotel Co To Pay 175% Dividend; 6 Brokerages Give BUY/SELL, Highest TP Rs 680

Tata Group and Jhunjhunwalas-backed Indian Hotels have reported mixed earnings with YoY performance being healthy, however, contracting on a sequential basis. But there is good news, as Indian Hotels is going to reward investors with a dividend payout to the tune of 175%. Also, its outlook is positive as it continues to focus on diversification of topline with new brands. A total of six brokerages have given their buy, sell and ADD recommendations on Indian Hotels' share price. 3 of them have assigned BUY with the highest target price of Rs 680, while 2 suggested ADDING the stock for fetching steady returns, and 1 brokerage assigned SELL.

On NSE, Indian Hotels' share price stood at Rs 571.75 apiece, down by 0.95% on April 26 with a market cap of Rs 81,384.74 crore. YTD, Indian Hotels' share has risen by 31%.

Indian Hotels Dividend:

While announcing its Q4 results, Indian Hotels has declared a dividend of Rs 1.75/- per Equity Share of Rs 1/- each fully paid up of the Company @ 175 % (previous year Rs 1/- per Equity Share of Rs 1/- each fully paid up @ 100%), subject to the approval of the Members at the forthcoming Annual General Meeting.

Indian Hotels Earnings:

In Q4FY24, Indian Hotels reported a consolidated revenue of Rs 1,905.34 crore, higher from Rs 1,625.43 crore in the same quarter of the previous year. FY24 revenue came in at Rs 6,768.75 crore versus Rs 5,809.91 crore in the previous fiscal.

Net profit of Rs 417.76 crore in Q4FY24, was also higher from Rs 328.27 crore in Q4FY23, but lower from Rs 451.95 crore in Q3FY24. FY24 net profit of Rs 1,259.07 crore compared to Rs 1,002.59 crore in the previous fiscal.

Indian Hotels Next Target Prices

Emkay Global On Indian Hotels:

The company continues to focus on diversification of topline with new brands, along with investment in digitization that can help in mid- & long-term revenue growth as well as margin improvement. Robust demand will aid RevPAR CAGR of 7% and consol. revenue/EBITDA CAGR of 15%/22% over FY24-26E, amid margin expansion.

We increase console. EBITDA by 0.8%/4.1% for FY25E/FY26E, on account of the robust sector outlook. We maintain ADD on IHCL, with TP of Rs615/sh (Rs575 earlier), ascribing 26x Mar-25E EV/EBITDA (25x earlier), given continued strength in business.

Elara Capital On Indian Hotels:

With industry-leading portfolio addition, IH plans to open 25 hotels in FY25. Despite the increased pace of new signings in the industry, IH's key Taj assets (in different micro markets pan-India) are facing minimal new supplies (from competition), thus the continued growth momentum. IH is set to grow in terms of room additions at ~9% through FY25E-26E, with an ARR CAGR of 8% led by new supply constraints. But we expect standalone occupancy to dip 200bps to 77% in FY25E, led by temporary room closures for renovation.

So, we pare FY25E EBITDA/PAT 7% each. In this backdrop, IH has run-up 27% in the past three months (unwarranted, in our view). So, we downgrade IH to Sell from Accumulate, with TP pared to INR 519 (INR 536 earlier) on 22x FY26E EV/EBITDA. We continue to remain bullish on the hotel industry upcycle.

Motilal Oswal On Indian Hotels:

We expect the strong momentum to continue in FY25, led by: 1) an increase in ARR due to healthy demand, asset management strategy (upgrades in hotels), and corporate rate hikes; 2) sustaining higher occupancy levels led by favourable demand-supply dynamics; 3) strong room addition pipeline till FY28 in both owned/leased (2,779 rooms) and management hotels (10,174); 4) higher income from management contracts; and 5) value unlocking by scaling up reimagined and new brands.

We broadly maintain our FY25/FY26 EBITDA estimates and reiterate BUY with our SoTP-based TP of Rs 680.

Kotak Institutional Equities On Indian Hotels:

IHCL trades at 23X EV/EBITDA on FY2026E earnings with a growth trajectory of 31% CAGR over FY2024-26E, which will likely be followed by 12% CAGR over FY2026-30E. IHCL is the largest player in India's hospitality sector, with its wide presence across mid-to-premium segments as well as in business and leisure locations.

Maintain ADD with a revised FV of Rs640/share (Rs620/share earlier) as we roll forward to June 2026E. We highlight that the downward revision in EBITDA by 9% is primarily on account of the delay in the commissioning of properties as well as the impact of lower standalone ARR due to the dilution effect of Ginger.

Morgan Stanley On Indian Hotels:

Stanley maintained Overweight on Indian Hotels for a target price of Rs 529 per share with a positive outlook.

Investec On Indian Hotels:

While maintaining a BUY rating, this brokerage raised the target price to Rs 626 per share with a Positive outlook.

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author or Greynium Information Technologies. The author, the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.