Checking into these two hotel stocks could fetch you up to 22% returns, Nomura says

Shares of Indian Hotels Company Ltd. (IHCL) and ITC Hotels Ltd. are in focus on Wednesday, January 14, after brokerage firm Nomura initiated coverage on them.

Nomura has initiated coverage with "buy" calls on both, Indian Hotels and ITC Hotels, and sees a potential upside of up to 22.4% on the stocks.

Indian Hotels

Nomura has initiated a "buy" call on Indian Hotels, with a price

target of ₹830 per share, indicating a potential upside of 22.4% from its previous close.

It said the company has growth visibility on average daily rate (ADR) remains high, driven by constrained but strong supply and a low dollar ADR base.

Indian Hotels' earnings quality is improving with the rising return on invested capital (RoIC) through asset-light expansion and its Ginger brand, Nomura said, adding that the company is well-positioned to achieve or exceed its 2030 targets for revenue, return on capital employed (RoCE) and its portfolio size.

The brokerage expects Indian Hotels' revenue and earnings before interest, tax, depreciation and amortisation (EBITDA) to grow at a compounded annual growth rate (CAGR) of 15% - 16% over financial year 2025-2028 respectively..

Of the 27 analysts that have coverage on the stock, 19 have a "buy" rating, six have a "hold" rating and two have a "sell" rating.

ITC Hotels

Nomura has also initiated coverage with a "buy" rating on ITC Hotels along with a price target of ₹230 per share, implying a 19.7% upside potential from Tuesday's closing levels.

It said the company's high single-digit revenue per average room (RevPAR) growth visibility is driven by resilient average room rate (ARR) and improving occupancy.

The upside in ITC Hotels' RevPAR is set to drive margin expansion and cost structure improvement towards luxury peers, Nomura said.

Return on invested capital (RoIC) for ITC Hotels is expected to improve with managed keys strategy and recovery in its Sri Lankan assets, the brokerage note said.

Nomura is projecting a 15% revenue CAGR and an 18% EBITDA CAGR for ITC Hotels over financial year 2025-2028.

All 11 analysts who have coverage on ITC Hotels have "buy" ratings on the stock.

Shares of Indian Hotels had declined 1.8% on Tuesday, while those of ITC Hotels had gained 0.8%.

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