Nomura bullish on Tier 1 hospitality, starts coverage on 2 largecap stocks—Invested in them?

Nomura has initiated coverage on two listed hotel companies, indicating a positive stance on the hospitality sector. The brokerage has given ‘buy’ ratings to ITC Hotels Ltd and Indian Hotels Ltd, citing strong demand conditions and improving earnings outlook.

Nomura initiates coverage on ITC Hotels

Nomura initiated coverage on ITC Hotels with a ‘buy’ rating and a target price of Rs 230. The brokerage expects high single-digit growth in revenue per available room, supported by resilient average room rates and improving occupancy levels.

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Nomura said RevPAR upside should support margin expansion, along with a gradual improvement in the company’s cost structure toward luxury hotel peers. It also expects return on invested capital to improve, helped by the managed keys strategy and a recovery in the Sri Lanka assets.

The brokerage forecasts revenue and EBITDA CAGR of about 15 per cent and 18 per cent, respectively, over FY25 to FY28.

ITC Hotels share price, Returns

Shares of ITC Hotels closed marginally lower on Wednesday. The stock ended 0.23 per cent down at Rs 192, valuing the company at around Rs 39,991 crore.

The stock has delivered mixed returns in recent periods. It has declined 0.96 per cent over the past week, gained 0.65 per cent in the last one month, and is down 2.30 per cent on a year-to-date basis. ITC Hotels touched a 52-week high of Rs 261.62 in July 2025 and a low of Rs 155.10 in January 2025.

Q2 FY26 performance

ITC Hotels reported a strong showing in the second quarter of FY26. Consolidated net profit rose 74 per cent year-on-year to Rs 132.77 crore, compared with Rs 76.17 crore in the same quarter last year.

Revenue from operations grew 8 per cent on-year to Rs 839.48 crore. EBITDA increased 15.7 per cent to Rs 245.7 crore, while EBITDA margin expanded by 200 basis points to 29.3 per cent.

The hotels segment posted revenue of Rs 822.80 crore in Q2 FY26, up 7.76 per cent year-on-year and higher than Rs 800.57 crore in the June 2025 quarter. The real estate segment did not report any revenue, as the company is constructing super-premium branded residences in Colombo, Sri Lanka. Revenue will be recognised upon completion and sale. Other income for the quarter stood at Rs 10.68 crore.

Nomura’s view on Indian Hotels

Nomura also initiated coverage on Indian Hotels Ltd with a ‘buy’ rating and a target price of Rs 830. The brokerage cited strong visibility on average daily rate growth, driven by constrained supply and sustained demand.

It expects an improvement in the quality of earnings through asset-light expansion and growth in the Ginger brand. Nomura forecasts revenue and EBITDA CAGR of around 15 per cent and 16 per cent, respectively, over FY25 to FY28.

Indian Hotels share price

Shares of Indian Hotels were settled at Rs 688, up 1.45 per cent on Wednesday.

Indian Hotels Q2 FY26 results

Indian Hotels reported a sharp year-on-year decline in consolidated net profit for the September 2025 quarter. Net profit fell 48.62 per cent to Rs 284.92 crore, compared with Rs 554.58 crore a year earlier.

The profit decline came despite strong revenue growth. Revenue from operations rose 11.67 per cent year-on-year to Rs 2,040.89 crore.

At the operating level, EBITDA increased 16 per cent on-year to Rs 565 crore. EBITDA margin expanded to 30.8 per cent in Q2 FY26 from 29.9 per cent in the year-ago quarter. Total expenses rose to Rs 1,671.54 crore from Rs 1,502.01 crore in the same period last year.