IHCL margin slips 2.68 points sequentially as other income normalises
Revenue rose 14.03% year on year, but costs grew faster and the tax rate increased 2.07 percentage points sequentially.
Filed 11 May 2026, 17:32 IST · after market close · Indian Hotels Co Ltd (INDHOTEL)
Key takeaways
- IHCL’s consolidated Q4FY26 operating margin fell 2.68 percentage points sequentially as revenue declined 2.70% while expenses rose 1.50%.
- Revenue grew 14.03% year on year, but expenses grew faster at 14.30%, leaving the operating margin 0.16 percentage points lower.
- Other income fell 71.81% sequentially and still contributed 11.73% of pre-tax profit, making the quarter-on-quarter profit decline sharper than the operating-profit decline.
Price around the results
Q4 revenue held above last year but lost sequential momentum
Consolidated revenue rose 14.03% year on year to Rs 2,765.29 cr, while operating profit increased 13.53% to Rs 972.68 cr. Sequentially, revenue fell 2.70% and operating profit declined 9.59%, indicating weaker operating momentum after the Q3FY26 peak. Management said IHCL opened 15 hotels with 819 keys in Q4 and that it achieved its FY26 revenue guidance despite macro headwinds.
Higher costs and normalising other income weighed on Q4 profit
Expenses grew 14.30% year on year against 14.03% revenue growth, narrowing the operating margin by 0.16 percentage points. Sequentially, costs rose 1.50% even as revenue fell, cutting the margin by 2.68 percentage points; management also cited an Rs 18 cr payroll-cost increase in new hotels. Other income fell 71.81% sequentially, and its 11.73% share of pre-tax profit means the Q3 comparison was also affected by non-operating income; the tax rate rose 2.07 percentage points sequentially.
Margin remains well above peers but has not regained its Q3FY25 level
IHCL’s 35.17% operating margin was 20.36 percentage points above the 14.81% median for the 93 Consumer Discretionary peers that had reported the quarter. The margin has moved from 37.97% in Q3FY25 to 35.33% in Q4FY25, fell to 27.93% in Q2FY26, recovered to 37.85% in Q3FY26 and then slipped again in Q4FY26. This is a sequential setback after the Q3 recovery, rather than a third straight quarterly decline.
Expansion plans keep the focus on managed and capital-light growth
Management said its FY27 capex plan remains Rs 1,100-1,300 cr and that it plans to add more than 750 owned or leased keys. The company also said more than 4,250 managed keys are expected to support fee growth in FY27, against a pipeline of more than 250 hotels and 31,000 keys, of which 93% is capital-light. For the next quarter, management said 11 hotels with approximately 900 keys are scheduled to open.
The stock reaction was negative but smaller than its usual results move
The stock fell 4.07% on the first trading day after the results and underperformed the market by 2.24%. Its median absolute move after the previous eight results was 6.06%, with five declines and three rises, so this reaction was negative but less severe than its typical move. The stock remained 1.29% below the reaction-day level after five sessions.
Q4FY26 at a glance
Consolidated figures as filed with NSE — cross-checked against an independent source.
| Line item | Q4FY26 | Q3FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹2,765 cr | ₹2,842 cr | -2.70% | +14.03% |
| Other income | ₹100 cr | ₹354 cr | -71.81% | +21.99% |
| Expenses | ₹1,793 cr | ₹1,766 cr | +1.50% | +14.30% |
| Operating profit | ₹973 cr | ₹1,076 cr | -9.59% | +13.53% |
| Operating margin (%) | 35.17% | 37.85% | — | — |
| Interest | ₹55 cr | ₹56 cr | -1.59% | +1.91% |
| Depreciation | ₹167 cr | ₹150 cr | +11.34% | +17.87% |
| Profit before tax | ₹850 cr | ₹1,223 cr | -30.51% | +14.47% |
| Tax | ₹205 cr | ₹269 cr | -23.96% | +13.73% |
| Net profit | ₹645 cr | ₹954 cr | -32.36% | +14.71% |
| EPS (₹) | ₹4.21 | ₹6.35 | -33.70% | +14.71% |
Operating margin of 35.17% compares with a Consumer Discretionary sector median of 14.81% across 93 peers that have reported Q4FY26.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | -4.07% | -2.24% |
| Next session | -3.61% | — |
| 5 sessions | -1.29% | -0.46% |
| 15 sessions | -0.76% | — |
| 30 sessions | +9.71% | — |
Volume on the results session was 3.73× its 20-day average.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
This quarter
- IHCL opened 15 hotels with a total of 819 keys in Q4.
Guidance & outlook
- IHCL says its FY27 overall capex plan is ₹1,100–1,300 crore, in line with previous guidance.
- IHCL plans to open more than 750 owned or leased keys in FY27.
- IHCL expects more than 4,250 managed keys to drive robust fee growth in FY27.
Planned next quarter
- IHCL expects 11 hotels with approximately 900 keys to open in Q1.
Expansion
- IHCL has a pipeline of more than 250 hotels with over 31,000 keys.
- IHCL expects more than 100 pipeline hotels to open in the next 24 months.
- Capital-light properties account for 93% of IHCL's pipeline.
- The FY27 capex plan includes a 96-key addition at Taj Lucknow Gateway and renovations at two other properties.
New initiatives
- IHCL rolled out a new property management system in more than 100 hotels.
- IHCL deployed managed detection and response cyber security across more than 13,000 devices.
Problems & risks
- IHCL cited macro headwinds while reporting that it achieved FY26 revenue guidance.
- Payroll costs increased by ₹18 crore in new hotels.
What to watch
- Whether operating margin holds above 35.17% after the 2.68-percentage-point sequential decline.
- Whether other income remains near its 11.73% share of pre-tax profit or becomes less important to earnings.
- Q1 hotel openings against management’s stated plan for 11 hotels and approximately 900 keys.