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Even with turbulence in the skies and disruptions on the ground, The Indian Hotels Co. Ltd managed to steer through Q1FY26 with stable growth, though not without a few bumps in the margins.

The company reported a 32% year-on-year growth in consolidated revenue to ₹2,041 crore for the June quarter (Q1FY26), broadly in line with analysts’ expectations. The consolidation of TajSATS airline catering business from August benefitted growth.

Excluding TajSATS, revenue growth stood at a decent 13%, despite operational headwinds such as Operation Sindoor, flight disruptions and broader geopolitical events.

These headwinds, along with an early wage hike implemented in Q1, weighed on profitability. The company’s Ebitda margin declined by nearly 80 basis points year-on-year, settling at 28.2% for the quarter.

Still, the company remains optimistic. Its core hotels segment, which contributes around 85% of total revenues, is expected to clock double-digit growth in FY26, led by strong demand in the MICE (Meetings, Incentives, Conferences and Exhibitions) segment. The outlook for Q2 is expected to stay robust even as July last year was strong.

According to Dolat Capital Market, FY26 will mark the fourth consecutive year of outperformance for Indian Hotels and the broader industry.

“Thus, sustaining high growth may become challenging," they wrote in a report dated 17 July.

In Q1FY26, the company’s standalone business reported an 11% growth in revenue per available room (RevPAR). Occupancy rate dipped by 90 basis points year-on-year to 74.3%, while average room rates (ARR) rose 12%.

Indian Hotels continues to benefit from a healthy balance sheet. As of 30 June, gross cash reserves stood at ₹3,073 crore. For FY26, the company has outlined capital expenditure of ₹1,200 crore, which will be directed towards assets under construction, hotel renovations, expansion, and digital initiatives.

In Q1FY26, Indian Hotels opened six new hotels including a Taj in Alibaug, two SeleQtions resorts in Lakshadweep, a Gateway in Coorg, and a Ginger in Dehradun.

This takes its total portfolio to 392 hotels — of which 249 are operational while the rest are in the pipeline. Under its ‘Accelerate 2030’ strategy, Indian Hotels aims to grow its portfolio to 700 hotels by 2030.

Also read: Hotel deals more than double in Jan-June to $225 mn, but momentum could weaken

Analysts at Motilal Oswal Financial Services expect the company to maintain its growth trajectory, projecting a 16% revenue CAGR and 20% Ebitda CAGR over FY25–27, driven by room additions and ARR increases, while occupancy rate is seen improving slightly.

However, the stock’s rich valuations could limit near-term upside. Shares currently trade at 32x EV/Ebitda based on FY26 estimates, as per Bloomberg. The stock is down nearly 15% from its 52-week high of ₹894.90 touched on 30 December.

“Indian Hotels’ business positioning remains strong, led by superior execution, industry tailwinds from a demand-supply mismatch (though narrowing), and a healthy balance sheet — notwithstanding rich valuations," analysts at Dolat Capital said in a 17 July report.

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