Indian Hotels Co

Indian Hotels Co reported a robust Q2 FY26, with consolidated revenue growing 12% year-on-year to ₹2,124 crores. EBITDA increased by 16% year-on-year to ₹653 crores, leading to a 90 basis points expansion in EBITDA margin to 30.8%. Profit After Tax (PAT) also saw a 15% rise to ₹285 crores. Standalone revenue, however, grew by 4%, impacted by ongoing renovations and a high base from the previous year, though standalone EBITDA margin expanded 220 basis points to 40.8%.

The company achieved several key milestones, including the opening of its 250th hotel, Gateway in Goa Palolem, and two new company-owned greenfield hotels (127-key Vivanta and 151-key Ginger) in Ekta Nagar. In H1 FY26, IHCL signed 46 hotels and opened 26, with a target to open over 30 new hotels for the full fiscal year. This expansion brings the total operating hotels to 268 and 167 in the pipeline, reinforcing its position as India's largest hospitality ecosystem.

IHCL utilized the first half of the fiscal year for significant renovations across key properties, including the Taj Mahal Palace, Mumbai, where 150 rooms were impacted for 7 months. Major upgrades were also completed at Taj Palace Hotel New Delhi, President Hotel Mumbai, and Taj Fort Aguada. A total of ₹250 crores was invested in own business capex in H1. These renovations are expected to drive a minimum 12-15% higher Average Daily Rate (ADR) for the renovated rooms, contributing positively to performance in Q3 and fully in Q4.

The company's capital-light strategy proved effective, with management fees growing 21% year-on-year to ₹259 crores in H1 FY26. The new businesses vertical, encompassing Ginger, Qmin, amã Stays and Trails, and Tree of Life, demonstrated strong growth of 22% year-on-year, with expectations to reach 30% growth in H2 FY26. This growth is fueled by new Ginger additions, Qminization of Ginger properties, and Qmin's expansion to 104 outlets.

IHCL maintains a robust balance sheet with gross cash reserves of approximately ₹2,850 crores, even after a capital expenditure of ₹480 crores in H1. The company's Return on Capital Employed (ROCE) improved by 160 basis points to 17.3%, and Return on Equity (ROE) increased by 70 basis points to 15.5%. All growth initiatives and renovations are funded through internal accruals, without recourse to debt.

Management expressed confidence in achieving double-digit revenue growth for the year, citing strong structural tailwinds and constrained supply in the industry. Demand remains robust, particularly in key business cities where supply growth is less than 5%. The outlook for H2 is positive, driven by multiple global events, diplomatic visits, MICE activity, and a busy wedding season, with November showing strong business on books.

The Clarks transaction is progressing well and is expected to close within this quarter, adding 135 hotels and establishing IHCL as a leader in the mid-scale segment. Furthermore, 80-90% of the ANK and Pride portfolio is anticipated to migrate to the Ginger brand upon deal completion, expected before the end of this quarter. This integration is projected to add approximately ₹100 crores in management fees without significant capital investment.