Indian Hotels Stock Jumps 4% After Q2 Earnings Surge 232%, Brokerages Cautious

Indian Hotels Company (IHCL) saw a remarkable 4% jump in its stock price after announcing impressive Q2 FY25 earnings. The Tata Group company reported a stunning 232% year-on-year increase in net profit, amounting to Rs 554.6 crore. This surge in profit was driven by significant growth in revenue, improved occupancy rates, and strategic consolidation efforts, all of which have strengthened investor confidence in the company’s long-term prospects.

IHCL’s revenue from operations for Q2 reached Rs 1,826 crore, marking a 27% increase compared to the same quarter last year. The company’s average room rate (ARR) rose by 10.4% year-on-year, and its occupancy rate improved to 78%, reflecting a 150 basis point increase from the previous year.

Despite the positive earnings report, brokerages have shown a cautious outlook. Investec, for instance, maintained a ‘Hold’ rating on the stock while raising its target price from Rs 630 to Rs 742, citing strong growth supported by strategic expansions. Similarly, Emkay has provided a target price of Rs 700, highlighting IHCL’s diversified revenue streams and operational efficiency.

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The company has also posted strong guidance for the rest of the fiscal year, with double-digit revenue growth expected. However, analysts at Nuvama have revised their revenue and EBITDA estimates downward for FY25-27, citing a slower-than-expected growth rate in the hotel segment.

Despite these cautious forecasts, IHCL’s stock has shown impressive growth over the past year, gaining 75% while outperforming the Nifty index, which saw a 23% increase during the same period. As of 9:40 AM on November 8, IHCL shares were trading at Rs 712.40, up by 4% from the previous session, reflecting market optimism surrounding the company’s performance.

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However, with long-term growth expectations being revised, it remains to be seen if IHCL can maintain its momentum. The company’s leadership is confident that the favourable demand-supply dynamics in the hospitality sector will continue to support growth in the coming years. Nevertheless, the stock's trajectory will depend on how well the company manages to navigate market conditions and deliver sustained earnings growth over the next few years.

[Disclaimer: The content provided is for informational purposes only and should not be considered as investment advice. Always conduct thorough research and consult with a financial advisor before making investment decisions.]