Why Indian Hotels Share Price is Rising

One look at the hotel and you immediately identify the whole city. Now, that's the sign of a good hotel. One such legendary hotel, a symbol of a city's soul, stands tall on the shores of the Arabian Sea.

Owned by the prestigious Indian Hotels Company, this iconic establishment, the Taj, is instantly recognisable as the heart of Mumbai.

Indian Hotels is one of India's leading hospitality companies, known for its luxury properties across the country and abroad. With brands like Taj, SeleQtions, Vivanta, and Ginger, it caters to a range of customers, from luxury travelers to budget-conscious guests.

The company's strong portfolio and iconic properties have made it a leader in the Indian hospitality sector, as it focuses on growth, sustainability, and unique guest experiences.

Recently, Tata Group's Indian Hotels has been in the spotlight, not only for its beautiful hotels but also for its impressive stock performance. The company's share price rallied 9.3% over the past five days, following the announcement of its Q2 results.

Let's take a closer look at the company's performance to understand why Indian Hotels share price is rising.

#1 Stellar Quarterly Results

In Q2FY25, Indian Hotels reported consolidated net sales growth of 27% year-on-year (YoY) to Rs 18.3 billion (bn), benefiting from the recent consolidation of its TajSATS subsidiary.

Adjusting for TajSATS' revenue, the company's revenue grew 16% YoY, driven by increased demand across its hotel portfolio.

The consolidated net profit reached Rs 5.8 bn, bolstered by a one-time exceptional gain of Rs 3.1 bn from the TajSATS consolidation. Standalone net profit was Rs 2.5 bn, showing a 61.8% YoY rise.

Revenue per available room (RevPAR) recorded double-digit growth across all brands, with domestic same-store hotels delivering a 12% YoY increase in consolidated RevPAR and maintaining a 66% premium over competitors. This high RevPAR reflects Indian Hotels' pricing strength and ability to capture demand across India's hospitality sector.

Internationally, occupancy rates rose by 600 basis points YoY to reach 75%, resulting in a 10% RevPAR growth for the global portfolio. This indicates that Indian Hotels is attracting steady demand internationally, further contributing to revenue growth.

Management fee income also increased by 15%, reaching Rs 1 bn, supported by robust occupancy, firm per-room rates, and expansions in new locations.

This strong performance has encouraged investors. The company's growth in core metrics, coupled with a positive outlook for future expansions, has fueled investor optimism, driving the recent share price rally.

#2 Big Expansion Plans

Indian Hotels has recently signed agreements for 42 new properties, marking a significant expansion. This includes 12 new Taj hotels, with three located internationally in Bahrain and Thimpu.

Additionally, the company has diversified its offerings by adding three new SeleQtions hotels, three Vivanta properties, five under Tree of Life, nine rebranded Gateway hotels, and 10 new Ginger properties. These developments align with Indian Hotels' strategy to strengthen its presence across various segments.

Two major greenfield projects, Aguada Plateau in Goa and Shiroda in Maharashtra, have secured necessary approvals and are on track for timely completion. This expansion of high-profile assets is set to elevate Indian Hotels' brand presence in India's luxury hospitality market.

The company has also opened 14 new hotels, raising its total operating properties to 232 across brands. These additions include a Taj in Patna, a Gateway in Bekal, and a Vivanta in Jamshedpur, along with SeleQtions properties in Thimpu and Mahabaleshwar, three Tree of Life resorts, and six Ginger hotels.

Further, Indian Hotels has signed definitive agreements to acquire a majority stake in the Tree of Life brand, enhancing its presence in the boutique leisure market.

This expansion strategy has fueled investor optimism, contributing to a rise in Indian Hotels' share price. The company's broadening footprint, coupled with its focus on high-value assets and diverse brand offerings, has increased investor confidence in its long-term growth trajectory.

What Next?

Indian Hotels is poised for sustained growth, focusing on a double-digit revenue increase for the current fiscal year. With strong expectations for Q3 and Q4, the company remains optimistic about its trajectory.

Factors like rising disposable incomes, a recovering tourism sector, and growing demand continue to favor the hospitality industry. Indian Hotels also anticipates a strong second half, with Q3 typically being the best-performing quarter, boosted by the wedding season, as well as festive events in November and December.

The company aims to improve operating margins to the mid-30% range from the 28.5% achieved in the first half. This margin improvement aligns with its strategy to expand using a capital-light model, adding valuable properties like the Taj in Frankfurt and a Ginger hotel in Nagpur without heavy asset investments.

Future growth also looks promising through potential acquisitions like Claridges, which would further enhance Indian Hotels' portfolio in the luxury segment.

Overall, the company's focus on high-value, strategically located properties, coupled with its ability to meet rising demand in both domestic and international markets bodes well for the company.

How Indian Hotels Share Price has Performed Recently

In the past five days, Indian Hotels share price has rallied 9.3%. In the last month, it is up 3%.

In 2024, so far its share price has surged 67.5%. Additionally, it is up 77.8% in the last one year.

The stock touched its 52-week high of Rs 748.2 on 11 November 2024 and a 52-week low of Rs 403.1 on 10 November 2023.

About Indian Hotels

The Indian Hotels Company is primarily engaged in the business of owning, operating & managing hotels, palaces and resorts.

The company operates its hotels under four main brands catering different segments viz. luxury Taj, upscale/ upper upscale Vivanta/ Seleqtions and midscale/lean luxury Ginger segments.

To know more about the company, check out its factsheet and quarterly results.

You can also compare Indian Hotels with its peers:

Indian Hotels vs EIH

Indian Hotels vs Chalet Hotels

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

Happy Investing!

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