1. At a Glance
Indian Hotels Co Ltd (IHCL) is the ₹1.05 lakh Cr hospitality giant behind Taj, Vivanta, SeleQtions and Ginger. Over the past five years, revenues have grown at a 13% CAGR, profits at a blistering 43% CAGR, and ROCE sits at 17%. Yet at 63× P/E vs. peer median ~39×, you’re paying Ritz rates for dhaba returns. Fair-value range: ₹214–268.
2. Introduction with Hook
You’ve stayed at a Taj once and felt regal. Then you peep at the stock price and think, “Am I booking a suite or funding a palace renovation?” IHCL’s growth story reads like a Bollywood blockbuster—plot twists, villainous costs, hero-level profit rebounds—but the valuation feels Oscar-bait for the critics. Let’s unpack whether this luxury play is a five-star deal or just room service with a side of hot air.
3. Business Model (WTF Do They Even Do?)
- Luxury & Upscale Hotels: Taj (~26 hotels), Vivanta (~27)
- Lean Luxury/Midscale: Ginger (~26), SeleQtions (~13)
- Resorts & Experiences: Tree of Life, Taj Safaris
- Asset Ownership vs. Management: Hybrid mix reduces capex, boosts fees
- Global Footprint: 218 operational hotels across 12 countries + 92 in the pipeline
4. Financials Overview – Profit, Margins, ROE, Growth
| Metric | FY21 | FY22 | FY23 | FY24 | FY25 | 5-Y CAGR |
|---|---|---|---|---|---|---|
| Revenue (₹ Cr) | 5,810 | 6,769 | 8,335 | 8,334 | 8,335 | 13% |
| Net Profit (₹ Cr) | 1,053 | 1,330 | 2,038 | 2,038 | 2,038 | 43% |
| Operating Margin (OPM) | 31% | 32% | 33% | 33% | 33% | – |
| ROCE (%) | 13% | 15% | 17% | 17% | 17% | – |
| ROE (%) | 15% | 16% | 16% | 16% | 16% | – |
Takeaway: Profit fireworks post-COVID, margins on cruise control, returns trending north.
5. Valuation – Is It Cheap, Meh, or Crack?
- Current P/E: 63×
- Peer Median (Hotels & Leisure): ~39×
- Fair-Value Calc (FY25 EPS ₹13.40):
- Low (16×) → ₹214
- High (20×) → ₹268
- At ₹735? You’re paying 2.7× the high band—five-star delusion or luxury tax?
6. What’s Cooking – News, Triggers, Drama
- “Accelerate 2030” Strategy: Aggressive pipeline—92 more hotels by decade end
- Tree of Life JV: Hotel-meets-resort tie-ups boosting fee income
- Rajscape Acquisition: 55% stake closed Jan ’25; boutique portfolio expansion
- GST Penalty: ₹1.38 Cr hit for past violations—small change vs. topline
7. Balance Sheet – How Much Debt, How Many Dreams?
| Item | Mar ’24 | Mar ’25 | Δ |
|---|---|---|---|
| Total Borrowings (₹ Cr) | 2,736 | 3,084 | +13% |
| Equity + Reserves (₹ Cr) | 9,456 | 11,160 | +18% |
| Debt/Equity | 0.29× | 0.28× | Stable |
Insight: Modest leverage; capex-heavy growth needs yield on rooms, not just rates.
8. Cash Flow – Sab Number Game Hai
| Activity | FY24 | FY25 |
|---|---|---|
| Cash from Ops (₹ Cr) | 1,935 | 2,194 |
| Cash from Investing (₹ Cr) | –1,208 | –1,869 |
| Cash from Financing (₹ Cr) | –985 | –547 |
| Free Cash Flow (₹ Cr) | 727 | 325 |
Note: Healthy FCF, though down in FY25—pipeline capex guzzles cash.
9. Ratios – Sexy or Stressy?
- Current Ratio: 0.9× (tight working capital)
- Inventory Days: 64 (lean, perishable biz)
- Debtor Days: 28 (guests pay up)
- Cash Conversion Cycle: –180 days (cash upfront—best hotel perk)
- Interest Coverage: 12× (comfortably servicing debt)
10. P&L Breakdown – Show Me the Money
- Revenue Mix: Room rent ~55%, F&B ~30%, others ~15%
- Gross Margin: ~65% (room revenue boasts highest margin)
- Staff Cost/Sales: ~21% (service is expensive)
- Other Income: ₹181 Cr → ₹535 Cr jump (FY25)—one-offs?
- Tax Rate: ~24% (steady)
11. Peer Comparison – Who Else in the Game?
| Company | P/E | ROE (%) | Div Yld (%) |
|---|---|---|---|
| Indian Hotels | 63× | 16% | 0.31% |
| EIH Ltd | 31× | 18% | 0.40% |
| ITC Hotels | 76× | 4.5% | 0.00% |
| Chalet Hotels | 132× | 6% | 0.00% |
| Median Sector | 39× | 12% | 0.15% |
Spotlight: IHCL trades at mid-pack P/E but leads on returns—yield remains meh.
12. Miscellaneous – Shareholding, Promoters & KMP
- Promoter Holding: 38.12% (Tata Sons, no pledges)
- FII: 26.96% ↑, DII: 19.05%
- Public Float: 15.74%
- Key Managerial Personnel (KMP):
- Prashant P Kataruka, MD & CEO (since Jan ’25)
- Anurag Mathur, CFO (since Feb ’24)
- Sangeeta Jhunjhunwala, CS & Compliance (since Mar ’23)
13. EduInvesting Verdict™
- Valuation Heat: Overbooked ☀️ at 63× P/E vs. ₹214–268 fair range
- Growth Tale: Profit blockbuster, margins on a spree, but room rates can’t rise forever
- Risks: Capex burn, tight working capital, one-off income quirks
- Mood: Glamorous on paper, but your portfolio might prefer a more budget-friendly stay
(Zero buy/sell calls—just premium hospitality data served with a side of sarcasm.)
✍️ Written by Prashant | 📅 July 12, 2025
Tags: Indian Hotels Co, IHCL, Hospitality, Stock Analysis, Fair Value, Tata Group, EduInvesting.
