Oriental Hotels Ltd Q1 FY26 – South India’s Taj Proxy With 52x P/E and Malware Masala
1. At a Glance
Here’s the punchline: Oriental Hotels runs 7 hotels (825 rooms), mostly Taj-branded, with over 60% revenue from just two Chennai properties. Occupancy has climbed to 71%, RevPAR is ₹3,651, and FY25 PAT was ₹47 Cr on sales of ₹465 Cr. Yet, the stock trades at a P/E of 52x, higher than industry average, because apparently being Tata-adjacent is enough to justify premium valuations. Oh, and just last week, they reported a malware attack on their IT systems. So, welcome to a hospitality stock that offers Taj suites, spicy F&B, and cybersecurity drama for free.
2. Introduction
Oriental Hotels Limited (OHL) is basically the younger cousin of Indian Hotels Company (IHCL). You know that cousin who doesn’t earn as much but borrows clothes from the richer sibling? That’s OHL, proudly flaunting Taj, Vivanta, SeleQtions, and Gateway brands, all thanks to IHCL.
The company’s DNA is simple: put Taj boards on your hotels, hand over management fees to IHCL, and smile at guests. The portfolio is stable: 3 owned hotels, 2 leased, and 2 licensed, spread across Chennai, Cochin, Madurai, Mangalore, Coimbatore, and Coonoor. Basically, OHL is a South India hospitality play, with 60% of revenue concentrated in Chennai.
But here’s the twist: the hospitality sector is booming post-COVID, occupancies are back, ARRs have shot up, and F&B is thriving. Yet OHL remains a small-cap sidekick, overshadowed by big daddies like IHCL and Chalet. Investors treat it like a proxy bet on Taj hotels, hoping that brand halo lifts valuation.
Question: would you pay 52x earnings for a hotel stock where two hotels drive most of the income? Or is this just South Indian FOMO?
3. Business Model – WTF Do They Even Do?
Let’s decode the masala dosa of OHL’s business:
Rooms (50% revenue): Bread and butter. Occupancy 71% in FY24, ARR ~₹10,155.
Food & Beverages (43%): Basically, weddings, banquets, and buffets paying the bills.
Others (7%): Membership fees, car hires, random sundry income.
They don’t own all properties; out of 7 hotels, only 3 are owned. The rest are leased or licensed. Which means less capex headache but steady rent payments. The Taj Coromandel (212 rooms) and Fisherman’s Cove (149 rooms) contribute over 60% of revenues.
So OHL is essentially a Chennai hospitality duopoly with supporting cast in Madurai, Coimbatore, Coonoor, Mangalore, and Cochin.
Commentary: Profits swing like an auto driver’s mood in peak traffic. QoQ PAT down 66%, but YoY rebound looks good thanks to FY25 low base. Still, 90x forward P/E? That’s like paying for a 5-star buffet and getting two idlis.
5. Valuation Discussion – Fair Value Range
Method 1: P/E
Industry PE = 37x. EPS = ₹2.64. Fair value = ₹98/share.
One Response
Oriental hotels having land in Sriperumputhur, Tamilnadu which is one of the big industrial area, they have plan build new hotel in future