The Indian Hotels Company Limited — Q2 FY26 earnings call

Call held 4 Nov 2025

Management summary

Indian Hotels Co reported a strong Q2 FY26, with consolidated revenue up 12% and EBITDA up 16%, driven by strategic expansion and robust demand. Despite short-term headwinds like renovations and a high base, profitability improved with EBITDA margin expanding 90 bps. The company is on track with its capital-light growth strategy, expanding its portfolio and new businesses, and maintaining a healthy balance sheet.

Highlights

  • Consolidated revenue of ₹2,124 crores, up 12% YoY, marking the 14th consecutive quarter of record performance.

  • EBITDA margin expanded 90 bps to 30.8%, driven by sustained growth and strategic execution.

  • PAT increased by 15% to ₹285 crores, demonstrating strong profitability.

  • Management fees grew 21% YoY in H1'25-'26 to ₹259 crores, reflecting the success of the capital-light strategy.

  • The new businesses vertical (Ginger, Qmin, amã Stays and Trails, Tree of Life) showed strong growth of 22% YoY.

Concerns

  • Standalone revenue growth was 4%, impacted by hotels under renovation and a high base from the previous year.

  • Mumbai's H1 RevPAR growth was only 2% despite 84% occupancy, attributed to a one-off wedding event in the prior year.

  • Q2 consolidated RevPAR growth was mid-single digits, lower than H1's 9%, partly due to a weaker MICE segment.

Key financials

2 periods

Headline

  • Consolidated Revenue
    ₹2,124 Cr
    YoY +12%
  • Consolidated EBITDA
    ₹653 Cr
    YoY +16%
  • Consolidated EBITDA Margin
    30.8%
  • Consolidated PAT
    ₹285 Cr
    YoY +15%
  • Hotel Segment Revenue Growth
    7%
  • Hotel Segment EBITDA Growth
    12%
  • Standalone Revenue Growth
    4%
  • Standalone EBITDA Margin
    40.8%
  • Standalone PAT Margin
    24.8%
  • New Businesses Vertical Growth
    22%
  • ROCE
    17.3%
  • ROE
    15.5%

H1 FY26

  • Management Fees
    ₹259 Cr
    YoY +21%

What they filed

Q1 FY27: revenue up 14.6%, net profit up 18.8% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,826 2,533 2,425 2,041 2,041 +12%2,842 +12%2,765 +14%2,339 +15%
EBITDA501 962 857 576 570 +14%1,076 +12%973 +14%673 +17%
Net profit583 633 563 329 318 −45%954 +51%645 +15%391 +19%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Capital allocation

high confidence
  • Capex ₹1,200 Cr All growth is expected to be funded from our internal accruals only.
    • Renovations and upgradations across key hotels ₹230 Cr
    • Greenfield assets (Bandstand FSI, Ekta Nagar, Frankfurt, early stage projects)
    • Investment in own business (includes 44 rooms in Aguada) ₹250 Cr
    All of this growth is expected to be funded from our internal accruals only.
  • Debt Debt disclosed
    We are also sitting on almost 3000 crore cash as we speak. So there is a lot of opportunity. This is how we were able to do an M&A activity, where you don't have to take on debt.
  • M&A Clarks Acquisition · Pending regulatory

    To become the clear leader in the mid-scale segment in India with a portfolio of over 240 hotels.

    Expected to add another 135 hotels to our portfolio.

    The Clarks' transaction is progressing well. We expect to close it within this quarter and have begun integration activities. Once completed, it will add another 135 hotels to our portfolio.
  • M&A Ambuja Neotia Group Partnership · Signed

    To expand presence across Taj, SeleQtions and Tree of Life brands through a capital-light model.

    Multi-hotel framework agreement for 15 hotels, following a capital-light model through management contracts and revenue-sharing leases.

    During the quarter, we also entered into multi-hotel framework agreements with the Ambuja Neotia Group for 15 hotels across the Taj SeleQtions and Tree of Life brands, and with Madison Group for 10 Ginger hotels in South India.
  • M&A Madison Group Partnership · Signed

    To expand Ginger hotels in South India through a capital-light model.

    Multi-hotel framework agreement for 10 Ginger hotels, following a capital-light model through management contracts and revenue-sharing leases.

    During the quarter, we also entered into multi-hotel framework agreements with the Ambuja Neotia Group for 15 hotels across the Taj SeleQtions and Tree of Life brands, and with Madison Group for 10 Ginger hotels in South India.
  • M&A ANK and Pride portfolio Integration · Pending integration

    To migrate hotels to the Ginger brand and leverage the mid-scale segment leadership.

    80-90% of the ANK and Pride portfolio will migrate to Ginger upon deal completion, expected to add ~₹100 crores in management fees.

    We have not yet completed the ANK and Pride transaction, it should happen definitely before the end of this quarter, I think that's when we will start seeing that kind of traction, but very importantly once that happens and with the other hotels that we have in pipeline, which was a part of the narrative I gave, we will see very soon, over the next 12 months, 250 Ginger hotels in operation, making it the largest mid-scale brand in India.
  • Liquidity Cash ₹2,850 Cr Gross cash reserves are healthy, and free cash flow is strong enough to cover capex without balance sheet stress.
    Our balance sheet continues to be healthy with gross cash reserves of around Rs. 2,850 crores.

Guidance & targets

New Hotels Opening

  • New hotels opened New Hotels Opening · FY26 · High confidence 30+
    We are well on track to achieve our target of opening 30-plus new hotels in the current fiscal year.

    — Puneet Chhatwal

New Businesses Vertical Growth

  • Growth rate New Businesses Vertical Growth · H2 FY26 · High confidence 30%

    Previously 22% → 30%

    We expect these numbers to grow from 22% to 30% in the second half of this year.

    — Puneet Chhatwal

Clarks Transaction

  • Transaction closure Clarks Transaction · this quarter · High confidence Closed
    The Clarks' transaction is progressing well. We expect to close it within this quarter and have begun integration activities.

    — Puneet Chhatwal

Hotel Opening

  • Taj Ganges, Varanasi opening Hotel Opening · End Dec / Q4 FY26 / Jan next year · Medium confidence Operational
    Work is also progressing well on the expansion of 100-keys at Taj Ganges, Varanasi, which is expected to open either at the end of December this year or at the latest in Q4 or early Q4 in January next year.

    — Puneet Chhatwal

  • Taj Lucknow opening Hotel Opening · 2027 · High confidence Operational
    Further, 95-keys at Taj Lucknow will also become operational by 2027.

    — Puneet Chhatwal

Ginger Brand Scale

  • Ginger hotels in operation Ginger Brand Scale · next 12 months · High confidence 250
    we will see very soon, over the next 12 months, 250 Ginger hotels in operation, making it the largest mid-scale brand in India.

    — Puneet Chhatwal

Tree of Life Brand Scale

  • Tree of Life hotels Tree of Life Brand Scale · undisclosed · Medium confidence 100
    And Tree of Life, we will scale it up to 100 hotels. That's the guidance we have given.

    — Puneet Chhatwal

RevPAR Growth

  • RevPAR growth for key hotels RevPAR Growth · next calendar year · Medium confidence 10%
    We have been saying that almost 10% is the right way to look at it. And anything which is north of 10 is what we would like to see.

    — Puneet Chhatwal

Youth Skilling

  • Youth trained Youth Skilling · 2030 · High confidence 100,000

    From 35,000 today

    we have trained over 35,000 youth and are well on track to reach our goal of skilling 100,000 plus youth by 2030.

    — Puneet Chhatwal

Capex

  • Average annual capex Capex · next few years · Medium confidence 1000
    FY'27 is a little early, but I think in general, we've said over the next few years, we would spend about Rs. 1,000 crores on average.

    — Ankur Dalwani

  • FY27 Capex Capex · FY27 · Medium confidence 1200
    But you should assume anywhere between Rs. 1,200 crores for next year as well.

    — Ankur Dalwani

Market context

  • Double-digit revenue growth Revenue · FY26 · High confidence Double-digit
    IHCL remains confident of achieving its guidance of double digit revenue growth for the year driven by structural tailwinds for the industry.

    — Puneet Chhatwal

What to watch in Q3 FY26

Clarks Transaction Closure

next quarter
Current progressing well, expected to close within this quarter
Target Closed

Why it matters

This acquisition will significantly expand IHCL's mid-scale portfolio and leadership in the segment.

The Clarks' transaction is progressing well. We expect to close it within this quarter and have begun integration activities.

Risks & concerns

  • Short-term industry headwinds

    medium

    Despite short-term industry headwinds, the company continued its record performance, indicating resilience.

    Management acknowledged

  • Impact of renovations on standalone revenue

    medium

    Standalone revenue grew only 4%, impacted by hotels under renovation, particularly Taj Palace and President Hotel.

    Management acknowledged

  • High base effect from previous year

    low

    Mumbai's 2% RevPAR growth in H1 was influenced by a one-off wedding event in the prior year, creating a high base for comparison.

    Management acknowledged

  • Weaker MICE segment impacting Q2 RevPAR

    low

    Q2 RevPAR was impacted by a weaker MICE segment, though adjusted for this, growth was 9-10%.

    Management acknowledged

Q&A highlights

4 direct
Mumbai RevPAR growth despite high occupancy Partial
Last year, we had a one-off event, which created higher rates in Mumbai because of a very famous wedding. A lot of rooms were blocked, and that really assisted. Those one-off events will always have some impact.

Analyst questioned the low RevPAR growth in Mumbai despite high occupancy, and management explained it was due to a high base from a one-off event in the prior year, rather than underlying weakness.

Asked by Karan Khanna

RevPAR pressures in leisure destinations Direct
I don't see anything that would suggest why that growth should slow down, because there is not so much new supply coming in, and demand remains strong. There is another thing which we have, in the IHCL Enterprise RevPAR, going back to your previous question. As we are growing with different brands, now every brand doesn't attract that kind of RevPAR growth.

Analyst probed on potential pricing pressure in leisure markets, but management reiterated strong demand and limited supply, while also clarifying that enterprise RevPAR includes different brand segments.

Asked by Karan Khanna

Nature of Ambuja Neotia partnership Direct
It's pure play management contract or leases. Essentially, this is a partnership with an existing owner. It only deepens the relationship with them. So, this is a framework in which we will end up doing either leases or management contracts depending on the brand.

Clarified the capital-light nature of the strategic partnership, confirming it aligns with the company's preferred non-equity investment model for expansion.

Asked by Shaleen

Impact of Clarks integration and future brand opportunities Partial
We have not yet completed the ANK and Pride transaction, it should happen definitely before the end of this quarter, I think that's when we will start seeing that kind of traction, but very importantly once that happens and with the other hotels that we have in pipeline, which was a part of the narrative I gave, we will see very soon, over the next 12 months, 250 Ginger hotels in operation, making it the largest mid-scale brand in India.

Management indicated that the full impact and new opportunities from the Clarks integration, particularly for the Ginger brand, would become clearer after the transaction closes this quarter.

Asked by Karan Khanna

High supply growth in Tier 2/3 markets Direct
if your base is small, the percentage of supply growth looks very large. If Mumbai had 12%-14% supply growth, I would be worried, if Delhi had that kind of supply growth, I could get worried, but tier 2-tier 3 cities almost had nothing, so if you are coming from nothing and experiencing that kind of growth, it's very normal, this is how emerging markets grow...

Management addressed concerns about high supply growth in smaller markets by explaining it's a base effect and that IHCL strategically focuses on demand-supply gaps, often through managed hotels.

Asked by Karan Khanna

ARR uplift from renovated hotels Direct
Renovations, you can easily assume that any renovations like the one in Taj Palace should give you an uplift in ADR. In the second half, the Taj Palace versus second half last year should do over all the rooms, not just the renovated rooms, an ADR which is minimum 12% to 15% higher than last year.

Provided specific quantitative guidance on the expected positive impact of renovations on average daily rates for key properties.

Asked by Sameet Sinha

Early demand trends for Ekta Nagar hotels Partial
Ekta Nagar, it is too early because it's been open for a few weeks and in that there were 5-6 very good days because of the hype around Ekta Diwas. But then there were two not so good days because of the VIP visits for the Ekta Diwas. The hotels are very good locations. So, not everybody could get there unless you had an absolute security clearance and a special color on the car.

Management provided initial qualitative insights into the performance of newly opened greenfield hotels, highlighting both positive and challenging factors in the early days.

Asked by Vaibhav

3 min read 7 chapters

Detailed narrative

Q2 FY26 Performance Overview

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%.

Strategic Expansion and Milestones

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.

Portfolio Renovation and Asset Management

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.

Capital-Light Growth and New Businesses Vertical

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.

Balance Sheet Strength and Return Ratios

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.

Market Outlook and Demand-Supply Dynamics

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.

Clarks and ANK/Pride Portfolio Integration

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.

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