Wednesday, January 7 — Shares of Indian Hotels Company (IHCL) fell nearly 3% in early trade, with the stock trading around Rs 708 on the NSE, after Morgan Stanley downgraded the stock and flagged limited near-term upside despite steady operating trends in the domestic hotel sector.
Morgan Stanley downgraded IHCL to Equalweight from Overweight while raising its target price to Rs 811 from Rs 780. The brokerage said the ongoing RevPAR upcycle is playing out largely in line with expectations, without any meaningful positive surprise that could drive further re-rating in the near term.
The brokerage expects India’s domestic hotel industry to grow at 9–10% in Q3 FY26, with room rates rising 8–9% and occupancies improving by about 1%. For IHCL, standalone RevPAR growth is estimated at around 8%, reflecting slower growth on a higher base compared with the sharp recovery phase seen earlier.
Morgan Stanley also expects IHCL to deliver around 10% year-on-year growth in standalone and consolidated EBITDA, indicating stable but moderating earnings momentum. However, the brokerage cut its FY26–FY28 EPS estimates by 2–3%, citing slightly lower RevPAR assumptions and margin expectations.
The downgrade appears to have weighed on investor sentiment, as markets reacted to the view that while fundamentals remain healthy, valuation comfort and upside catalysts may be limited in the near term. The stock’s decline comes despite continued strength in domestic travel demand and steady operating performance across IHCL’s portfolio.
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