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Target: ₹284
CMP: ₹223.65
Indian Hotels Co Ltd’s (IHCL) FY22 Annual Report reiterates the company’s plans to execute its “AHVAAN 2025” strategy which essentially focuses on four key pillars — reaching a total of over 300 hotels across the portfolio; clocking a consolidated EBITDA margin of 33 per cent by FY26E with 35 per cent EBITDA share from management contracts and new businesses; achieving a 50:50 ratio between owned/leased and management contract room keys; and retaining a net cash balance sheet while pursuing its growth plans.
The company reiterates its commitment to 18 new hotel openings in FY23 and maintaining a similar annual run-rate to get to a 300 hotel portfolio over FY23-26.
The AHVAAN strategy is an extension of the company’s earlier “Aspiration 2022” strategy which focused on asset-light expansion and improvement in margins. We believe that the growth and margin targets set by the company management are realistic and we estimate FY23 consolidated revenue to grow 54 per cent y-o-y to ₹4,620 crore (104 per cent of FY20 levels) and FY24 revenue to grow 18 per cent y-o-y to ₹5,450 crore at an EBITDA margin of 32 per cent. We reiterate Buy rating with a revised SoTP-based target price of ₹284 (earlier ₹292). Key risks are: Fresh Covid waves impacting demand; and rise in costs denting margins.
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