Indian Hotels' Acquisition Strategy Targets Tourism Boom Amid Robust Growth and Margin Expansion

Indian Hotels Company (IHCL) plans to invest INR12bn in 2026 to double revenue growth and raise ROCE to 20%. The company aims to strengthen margins through sustainability initiatives and digital interfaces. Analysts expect revenue CAGR of 13% over FY 25-28, reaching INR124bn, and EBIT CAGR of 17% to INR36bn. Net profit CAGR is estimated at 11% to INR27bn with EPS expected to increase to INR19.3 in FY 28 from INR13.4 in FY 25.

The Indian Hotels Company (IHCL) has announced a significant investment plan for the financial year 2026 (FY26), aiming to double its revenue growth and raise the return on capital employed (ROCE) to 20%. This strategic move aligns with the company's broader objective to strengthen margins through sustainability initiatives and digital interfaces.

The company plans to invest INR12bn in FY26, focusing on new openings and sector momentum. This investment is part of a larger strategy to expand its portfolio, which currently stands at 350 hotels, to over 700 hotels by FY30. The expansion will also see the number of rooms jump to 70,000 by FY30 from the current 42,500, according to IHCL's chairman, N Chandrasekaran [2].

IHCL's growth plans include the acquisition of a boutique hotel chain like Tree of Life, which will be integrated into the company's portfolio. This acquisition will help IHCL diversify its offerings and cater to different market segments. The company has also earmarked over Rs 1,200 crore for renovations and digital investments, with a significant portion of the CAPEX going towards the renovation of iconic properties such as Taj Palace in Delhi and Fort Aguada in Goa [1].

Analysts expect IHCL's revenue to grow at a compound annual growth rate (CAGR) of 13% over FY25-28, reaching INR124bn. The EBIT CAGR is estimated at 17% to INR36bn, while the net profit CAGR is projected at 11% to INR27bn. The earnings per share (EPS) is expected to increase to INR19.3 in FY28 from INR13.4 in FY25 [2].

IHCL's expansion coincides with the growth plans of its rivals like Marriott, which is also aiming to expand its portfolio in India. The hospitality sector in India is expected to witness robust growth in the coming years, driven by increased domestic and international tourism, and IHCL is well-positioned to capitalize on this growth.

References:
[1] https://www.business-standard.com/industry/news/ihcl-unveils-taj-damdama-report-as-it-eyes-double-digit-growth-in-fy26-125070301081_1.html
[2] https://www.financialexpress.com/business/industry/indian-hotels-to-spend-rs-6000-cr-on-expansion-eyes-boutique-hotel-chain-acquisition/3906022/