Indian Hotels Co (INDHOTEL)

FairStock Score: 63/100 — STEADY

Score breakdown: P/E: 0/3 · ROCE: 1/2 · Growth: 2/2 · Dividend: 0/1

Key Financials

Strengths

• ROE of 17.98% and ROCE of 17.21% with a low D/E of 0.28 show efficient capital use and a conservative balance sheet.
• Altman Z-score of 4.96 and Piotroski F-score of 8/9 indicate strong financial health and high earnings quality.
• 5-year revenue CAGR of 39.55% and latest quarter net profit of ₹954 Cr on ₹2,842 Cr sales demonstrate solid momentum and operating leverage.
• Promoter holding of 38.12% keeps management aligned with minority shareholders.

Concerns

• Valuation is extreme: P/E 52.57, P/B 8.16, EV/EBITDA 50.63, far above Graham Number of ₹157.83 and DCF value of ₹88.18.
• Growth-quality mismatch: sales growth of 19.63% but profit growth of only 11.30%, resulting in a PEG of 6.35.
• Weak cash generation: FCF of ₹325 Cr is minuscule against the latest quarter net profit of ₹954 Cr; dividend yield is just 0.34%.
• Margin of safety is -322.64%, leaving no room for valuation error or cyclical downturn.

AI Analysis

Indian Hotels runs a quality business, but as a value investor I first ask: am I paying a sensible price? The numbers say no. The company earns an ROE of 17.98% and ROCE of 17.21%, with debt-equity of just 0.28. Its Altman Z-score of 4.96 and Piotroski F-score of 8 out of 9 suggest financial health and honest earnings. Promoter holding of 38.12% also keeps management aligned. Revenue has compounded at 39.55% annually over five years, and the latest quarter delivered ₹2,842 Cr of sales with ₹954 Cr of net profit—a strong margin. So the business has decent economics. But Graham taught me that a wonderful company can be a poor investment at the wrong price. At ₹639.45, Indian Hotels trades at 52.57 times earnings and 8.16 times book. EV/EBITDA is 50.63. These are not the multiples of a hotel company; they are the multiples of a flawless growth story. The Graham number is ₹157.83, and the DCF value I calculate is ₹88.18. The margin of safety is negative 322%. Sales grew 19.63% recently, but profit growth of 11.30% is far lower than the price implies; the PEG ratio of 6.35 would make any sensible investor pause. Free cash flow of ₹325 Cr is tiny compared to the latest quarter's net profit of ₹954 Cr, and the dividend yield of 0.34% offers no consolation. This is a cyclical business in an industry subject to demand swings. The market is paying a premium as if booms never fade. I would not buy at this level. I need a price that gives me margin of safety. Today, I see quality, but no value.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer