Are Indian Hotels Co latest results good or bad?

The latest financial results for Indian Hotels Co highlight a complex performance landscape shaped by seasonal trends and operational challenges. In Q2 FY26, the company reported a revenue of ₹2,041.08 crores, reflecting a year-on-year growth of 31.66%. However, this was accompanied by a sequential decline of 15.84%, indicative of the typical lean season in the hospitality sector during the April-June period.
Net profit for the quarter stood at ₹296.37 crores, showing a year-on-year increase of 19.32%, yet it experienced a significant sequential decline of 43.26%. This drop underscores the operational difficulties faced during off-peak months. The operating margin, excluding other income, was reported at 28.22%, which represents a contraction of 707 basis points sequentially and a slight decrease of 78 basis points year-on-year. The profit after tax margin also contracted to 15.65%, down from 22.27% in the previous quarter.

The half-yearly performance for H1 FY26 presents a more balanced view, with net sales of ₹4,081.97 crores indicating a growth of 20.90% compared to the same period last year. However, the volatility in quarterly results raises questions about the sustainability of the premium valuations the company currently commands.

In terms of operational efficiency, the average return on equity (ROE) and return on capital employed (ROCE) remain modest, suggesting that while revenue growth is strong, capital efficiency is still a work in progress. The balance sheet shows improvements, with a reduction in long-term debt and a strengthened financial position, indicating prudent management practices.

Overall, Indian Hotels Co's results reflect a company navigating the inherent seasonality of the hospitality sector while striving for operational efficiency amidst fluctuating quarterly performances. The company saw an adjustment in its evaluation, reflecting the complexities of its current financial landscape.