The hospitality sector experienced a significant rally with hotel stocks surging up to 5% in Monday's intra-day trade on BSE, extending previous week gains. According to Business Standard, these stocks outperformed the market by 5-11% in the past week, contrasting sharply with a near 1% rise in the benchmark index. However, hotel stocks have declined up to 17% over the past year, significantly underperforming the BSE Sensex's 5.6% decline. The sector's recent performance reflects growing investor confidence in the hospitality outlook, with companies like Lemon Tree Hotels and ITC Hotels also participating in the rally.
ICICI Securities has issued a buy rating on Indian Hotels Co. Ltd. (IHCL) with a target price of ₹925 in its research report dated June 23, 2026. The brokerage has revised the target price upward from the earlier ₹916, valuing the company on 30x June 2028E EV/EBITDA. According to reports from The Hindu BusinessLine, this recommendation reflects the brokerage's bullish outlook on the hospitality sector, with the company's strong keys pipeline, coupled with high single-digit RevPAR growth at an industry level and contribution from new business and management fees, expected to enable mid-teens revenue/EBITDA growth in the medium term. The current market price stands at ₹725.05.
IHCL delivered resilient performance in FY26 with 16% revenue growth and 15% EBITDA growth despite facing geopolitical disruptions in Q1FY26 and March 2026. As reported by The Hindu BusinessLine, FY26 marked a record of 250 signings, expanding the company's portfolio to 630 hotels. The company strengthened its presence in the luxury segment through strategic acquisitions including Claridges Collection, controlling stake in Atmantan, and acquisition of Brij Hospitality. Ginger acquired majority stake in ANK Hotels and Pride Hospitality. The company opened/onboarded 130+ hotels, taking IHCL's operating hotels to 375 hotels as of the latest reporting period.
According to the research report, IHCL currently operates approximately 33,100 operational keys at the entity level as of April 2026, with a robust pipeline of another 31,300 keys set to open over the next 4-5 years. This expansion strategy positions the company for significant growth in the hospitality sector. The hospitality sector is expected to remain stable in FY27, supported by domestic leisure travel and MICE sector demand, with room rates likely to remain firm. India's rising prominence in the global economy is expected to contribute to sectoral growth by attracting higher inflows of foreign visitors, including heads of states and senior business executives. The travel and tourism sector's long-term outlook continues to be strong, driven by India maintaining its status as the fastest growing large economy, an undersupplied industry, rising disposable incomes and sustained development of the country's travel infrastructure.
As reported by The Hindu BusinessLine, IHCL maintains a strong net cash position of ₹4,300 crore as of March 2026, acting as a financial cushion for the company. The research projects consolidated 12% revenue CAGR and 15% EBITDA CAGR over FY26-29E, assuming 7% like-for-like RevPAR growth. In FY26, the company incurred capex of ₹1,040 crore and plans to incur ₹1,100-1,300 crore of capex in FY27 with additional room for growth through inorganic expansion. The company's strong financial position provides flexibility for continued expansion and growth initiatives across its hospitality portfolio.
