Indian Hotels Gets A Target Price Hike From Nomura After 20% Correction — Should You Buy?

Brokerage firm Nomura has lowered its target price on Indian Hotels Company Ltd (IHCL) to Rs 800 from Rs 830, while maintaining a ‘Buy' rating on the stock. The revision comes after the stock corrected over 20% in the past six months, largely due to volatility linked to geopolitical tensions. Despite the downgrade in target price, Nomura remains constructive on the company's medium-term outlook, citing reasonable earnings growth visibility and attractive valuations at current levels.

According to the brokerage, the ongoing Middle East conflict is expected to have a relatively contained impact on IHCL's near-term performance. While some cancellations have been observed in March, management indicated that bookings remained strong earlier in the quarter, supported by events such as the ICC World Cup in Mumbai and the Auto Summit in Delhi.

Nomura now expects IHCL's EBITDA to grow 11% year-on-year in Q4FY26, slightly lower than its earlier estimate of 13%. Revenue growth is also projected to moderate to around 11%-12% year-on-year. However, the brokerage emphasised that the overall disruption is likely to be short-lived, with demand conditions expected to normalise over the next two to three months.

ALSO READ: Gulf Conflict Impact Limited On Indian Hotels, ITC Hotels, Lemon Tree: Nomura

Earnings Estimates Trimmed Marginally

Reflecting near-term uncertainties, Nomura has cut its FY27 and FY28 earnings per share (EPS) estimates by 3% each. It now expects EBITDA CAGR of 13-14% over FY26–FY28, compared to its earlier projection of 15%.

Despite this moderation, growth remains robust, supported by strong expansion in management contracts, steady demand in the luxury segment, and improving operating leverage.

Nomura also noted that IHCL continues to trade at around 22x FY28 EV/EBITDA, broadly in line with its long-term averages, suggesting valuations remain reasonable.

Growth Drivers Remain Intact

Looking ahead, the brokerage expects IHCL to benefit from multiple structural tailwinds. These include expansion in management contracts, new room additions across key cities such as Tirupati, Varanasi, and Ekta Nagar, and continued momentum in the premium hospitality segment.

Additionally, the company's asset-light strategy is expected to drive margin expansion, with higher contribution from management fees. Nomura also highlighted the potential for operating leverage to support profitability as occupancy levels stabilise. While FY27 could see some volatility due to geopolitical spillovers and recent disruptions, the brokerage believes IHCL is well-positioned to deliver steady growth over the medium term.

Of the 29 analysts who track this stock, the majority (23) have a 'buy' call on the counter, five have a 'hold' and one has a 'sell' rating, with an average 12-month target price of Rs 824.57, implying an upside potential of 32.6%. 

ALSO READ: India Has Just 0.27 Hotel Rooms Per 1,000 People — Are These Two Stocks Next Indian Hotels?

Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.