Indian Hotels Company Ltd (INDHOTEL) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, good day and welcome to The Indian Hotels Company Limited earnings conference call for the quarter ended 30th September 2026. On the call, we have with us Mr. Puneet Chhatwal, Managing Director and CEO, IHCL, and Mr. Ankur Dalwani, EVP and CFO, IHCL. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star and then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Puneet Chhatwal. Thank you, and over to you, Mr. Chhatwal.
Puneet Chhatwal (The Indian Hotels Company Limited): Good evening, everyone, and thank you for joining our global conference call for Q2 26-27. We are pleased to inform you that we have continued our record performance for the 18th consecutive quarter, underpinned by our diversified operating model and disciplined execution despite macroeconomic headwinds. Building on this strong foundation, sustained momentum, and seasonally strong quarters ahead, we are confident of exceeding our previously communicated FY '27 consolidated revenue growth guidance of 12% to 14% by 300 basis points. Accordingly, we are revising our full-year growth guidance upwards to 15% to 17%, and within that, the hotel segment revenue is expected to grow by 17% to 19%. I'll now outline the 10 key highlights of the quarter. Number one, the strong performance in the second quarter. Our consolidated operating revenue grew 22% year-on-year to Rs. 2,484 crores. Operating EBITDA grew 24% year-on-year to Rs. 706 crores, yielding operating EBITDA margin of 28.4%, an expansion of 50 basis points. Our bottom line grew by 23% to Rs. 349 crores. Consolidated hotel segment operating revenue
Puneet Chhatwal (The Indian Hotels Company Limited): and EBITDA grew by 25% and 30% respectively driven by the strength of our diversified brandscape and unique portfolio. On the standalone basis, we continued to deliver strong performance with operating revenue growing 26% year-on-year to Rs 1,336 crores and operating EBITDA growing by 40% to Rs 520 crores yielding operating EBITDA margin of 3- 38.9%. That represents an expansion of 400 basis points. Our standalone PAT margins stood at a healthy 27%. Our performance is not defined by a single year, but by sustained execution over time. Over the past five years, we have delivered double-digit CAGR across revenue, EBITDA and PAT reflecting consistency and structural strength of our business model. Importantly, our current growth rate is ahead of our five-year CAGR demons- demonstrating a clear acceleration in our growth trajectory. Moving on to the second highlight is double-digit RevPAR growth across all brands on the back of strong domestic demand. The Indian hospitality sector witnessed multiple macro headwinds during this quarter. Ongoing geopolitical tensions in West Asia resulted in elevated fuel prices leading to reductions in airline capacity and higher airfares, which moderated travel demand, particularly in certain international and long-haul corridors. Despite these challenges, domestic demand remained resilient supported by multiple large MICE events such as the BRICS Summit. We delivered double-digit RevPAR growth across all our brands, demonstrating the resilience of our business model and the strength of our market positioning. This translated into market share gains with occupancy increasing from 75% in Q2 last year to 82% this year. Our continued focus on efficient revenue management and operational excellence enabled us to achieve 28% growth in standalone RevPAR and 25% growth in consolidated domestic hotels RevPAR. Number three as a highlight was asset management driving pricing power in key cities. Our asset management strategy continues to be a key driver of growth and value creation. During the last financial year, we completed major upgrades across several marquee hotels including Taj Palace, New Delhi, President, Mumbai, Taj West End, Bengaluru, Taj Fort Aguada in Goa, and Taj Lake Palace, Udaipur. These investments are now translating into stronger pricing power and improved operating performance across key markets. We expect this momentum to continue through the second half of FY 27. A strong example is Taj Palace, New Delhi where room revenue grew 132% in Q2 FY 27 versus last year. In September, the hotel crossed 100 crore in monthly revenue for the first time while delivering a very high CGOP margin. This underscores our ability to deploy capital in a disciplined manner, unlock value from our, our existing assets, and generate strong returns with a relatively short payback period. Number four, portfolio growth. We continue to deliver industry-leading portfolio expansion with 47 hotel signed and 20 hotels opened in H1 FY 27 taking our portfolio to 670 hotels with over 69,000 keys in operation or under development. With 390 operational hotels, we are on track to cross the 400-hotel milestone in November or latest before the end of Q3. Our pace of growth is accelerating. It took us 110 years to reach 100 operational hotels in 2013, another 12 years to double that to 200 in 2025, and just 18 months to approach 400 operational hotels. More importantly, our growth remains capital-light and very well diversified. Of the over 34,800 keys in our pipeline, 94% are capital-light,
Puneet Chhatwal (The Indian Hotels Company Limited): limiting capital requirements, which in return enable us to scale our portfolio, expand our margins, and improve returns on capital. This is a very interesting phase because we have given a guidance under Accelerate 2030 of 700 hotels portfolio. We will revert to all the investors by middle of November with a revised target of the 700 because we should get to that number definitely before the end of this financial year. Number five, management fee growth backed by new opening opening momentum. Our asset-light growth driven by management contracts continues to translate into strong growth in management fees. During the quarter, management fee income grew by 25% to 156 crores from 125 crores in the corresponding period last year. This growth was driven by 25% increase in managed room inventory, higher RevPAR, technical fees, and new revenue streams like brand fees from various branded residences and villas projects. This performance, despite temporary headwinds, reinforces the resilience of our asset-light business model. Looking ahead, we remain confident of sustaining management fee growth at a high teens CAGR, supported by a strong pipeline of hotel openings and incremental contributions from newly added hotels. Number six, select service business, consistently driving and delivering on all fronts. IHCL's select service business, comprising of Ginger, Qmin, amã, and Tree of Life, continued to deliver robust performance. Consolidated revenue of Ginger stood at rupees 193 crores, delivering 24% growth year-on-year with an EBITDA margin of 40%. Our growth brands continue to scale new milestones this quarter. Ginger became India's first hotel brand, yes, it became India's first hotel brand to reach 100 operational hotels and is on track to reach 150 by March 31, FY27. Qmin now has over 130 outlets. amã Stays & Trails has crossed 400 villas and bungalows. And Tree of Life has grown to a portfolio of over 50 resorts. Number seven, a strong balance sheet with healthy cash reserves. Our balance sheet continues to be healthy with gross cash reserves of over rupees 4,350 crores. This provides us with the flexibility to continue investing in brand and revenue enhancing initiatives including hotel upgrades, expansions, greenfield developments, and asset management opportunities such as strengthening our marquee food and beverage concepts. Number eight, Oriental Hotels merger strategic as a strategic transaction unlocking synergies. During the quarter, we also announced strategic merger of OHL with IHCL, which will unlock operational synergies, expand asset ownership, and accelerate long-term revenue growth. It will also leverage IHCL's strong balance sheet to fund inventory expansion and product upgrades, further strengthening the portfolio's premium positioning. The all-stock transaction with a share exchange ratio of 25 IHCL shares for every 117 OHL shares is expected to drive 6% to 7% upside in our standalone operating revenue in FY28. We do not expect this transaction to come into force before 1st April of next year, so the guidance that we are providing of 300 basis point increase in the total revenue for the year does not include revenues from OHL. That will come on top next year. The merger will further simplify the group's holding structure by increasing IHCL's direct ownership, thereby streamlining governance, optimizing corporate overheads, and enhancing operational efficiency. The scheme of arrangement has been filed with the stock exchanges and, as I already mentioned, the appointed date remains at 1st April, 2027. Number nine, Paathya. Staying aligned with our ESG++ initiative, Paathya, that is what we call it, is well on the journey towards our 2030 targets. It remains absolutely on track and IHCL now uses 41% energy from renewable sources and has installed over 361 EV charging stations
Puneet Chhatwal (The Indian Hotels Company Limited): across 170 locations in India. Continuing our journey of eliminating single-use plastic, IHCL has installed bottling plants at 92 hotels and achieved 54% recycling of water used in Q1. IHCL currently partners in operating 83 skilling centers across 20 states in India. Since 2020, we have trained over 56,000 youth, and and we are very well on track to reach our goal of skilling 100,000-plus youth by 2030. Finally, the number 10 point is Taj was rated by Brand Finance as World's Strongest Luxury Hotel Brand, and we are extremely delighted that this is happening again and again, year after year, including Taj being recognized as India's strongest big brand across all sectors, which was announced in the previous quarter. Further reinforcing this leadership, Taj Falaknuma Palace and Taj Lake Palace have retained their 3 Michelin Keys rating for the second consecutive year, making them the only two hotels in India to receive this distinction. We are grateful to our loyal patrons and dedicated colleagues who have played an integral role in making Taj the epitome of hospitality and luxury. Finally, looking ahead to the remainder of the year, which is our H2. As we look ahead, we remain confident of delivering on our upgraded guidance for 15% to 17% revenue growth for FY '27 with hotel segment growing from 17% to 19% with sustained margins and strong cash generation. We're also on track to achieve our target of 50 hotel openings this year. That means 30 hotels are expected to open in the second half of this year. With strong foundations in place, disciplined execution and a clear strategic direction, we remain focused on delivering sustainable, profitable growth and long-term value for all our stakeholders. Thank you, and we will now be happy to take your questions.
Moderator: Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and then one on their touchtone phone. If you wish to remove yourself from the question queue, you may press star and then two. Participants are requested to use handsets while asking a question. We also request participants to limit themselves to two questions each and rejoin the queue for any further follow-up questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Again, to register, please press star and then one. Your first question comes from the line of Binay Singh with Morgan Stanley. Please go ahead.
Binay Singh (Morgan Stanley): Hi team. Thanks for the opportunity. Congrats on a very strong set of numbers. I have two questions. Firstly, you know when we look at your revised guidance, it implies mid-teens plus growth in the second half. Given that occupancy rates are already running quite high at 82%, although they keep surprising us on the upside, but fair to assume that the incremental growth will be more driven by room rates. Thus, to an extent, higher trickle-down to on the leverage side on the margin side? That's the first question.
Puneet Chhatwal (The Indian Hotels Company Limited): And the second?
Binay Singh (Morgan Stanley): The second is when we look at the TajSATS air catering business, even sequentially, we see the EBITDA lower. So, could you talk a little bit about what happened over there?
Puneet Chhatwal (The Indian Hotels Company Limited): So, Ankur was signaling he wants to answer the second question. But I let me answer it also first. Okay. So we answer the second one first. TajSATS is already improving. You know the geopolitical crisis has not been very helpful and kind to airlines sector as well as airline catering business. Having said that, if you look at the non-aviation revenues from TajSATS, which is really driven by institutional catering, they have really done quite well in diversifying that revenue. We remain very I would say optimistic on TajSATS going back to where it was and actually even improving upon it in the second half. Of course, we have no control over any further activities on the war front in in West Asia. On the first one, yes, most
Puneet Chhatwal (The Indian Hotels Company Limited): Growth is coming from rates. But we also expect besides, you know, the typical domestic and average rate, I think we are also expecting to do much better in the third quarter in our international portfolio, especially London, Pierre, San Francisco, and, and, and, and anything else that we're opening and, and Frankfurt will be ramping up quite well after a 6 months of, let's say, start-up challenges, which we have had, and we mentioned those in the last call also. So, so all in all, is positive. I think Ankur wants to add to whatever I said and I pass it on to him. Yeah.
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