Axis Capital sees 27% upside for EIH as hotel pipeline revives
Axis Capital set a Rs 385 target for EIH with a Buy rating, implying around 27% upside from Rs 303. The brokerage flags a 12-year valuation low and projects room additions to grow at 9% CAGR over FY26–FY31, with larger earnings contributions after FY29.
The development
Axis Capital set a Rs 385 target price for EIH with a Buy rating, implying around 27% upside. It expects room additions to grow at a 9% CAGR between FY26 and FY31, with larger earnings contributions after FY29.
The numbers
- Rs 385 per share
- around 27%
- Rs 303
- 12-year low
- around 13x one-year forward EV/EBITDA
- around 35% to Leela
- 38% to ITC Hotels
- 55% to IHCL
- 17x September 2028E EV/EBITDA
- 15% discount to Leela
- 9% CAGR between FY26 and FY31
- 16% CAGR
- after FY29
- 8-9%
- 11% CAGR over FY26-29
- around Rs 9 billion
- Rs 22 billion
- around Rs 38 billion
Why it matters to operators and investors
EIH’s reviving hotel pipeline merits screening for partnership opportunities and competitive overlap, with any deal underwriting accounting for the projected post-FY29 earnings ramp.
What to watch next
- Room additions versus the projected 9% CAGR over FY26–FY31.
- Opening delays, construction-cost revisions and pre-opening expenses.
- Capital expenditure, net debt and free-cash-flow trends.
- Occupancy, average room rates and RevPAR at existing and newly opened hotels.
- Competing hotel supply in expansion markets.
- Whether the reported 12-year valuation low persists on comparable forward-earnings assumptions.
- Investors are likely to seek property-level opening dates and the owned-versus-managed mix before assigning full value to the pipeline.
- Management may emphasize phased capital commitments and funding visibility to address the gap between spending and post-FY29 earnings.
- Analysts may compare EIH with peers on cash conversion and returns on incremental capital, rather than room growth alone.
The counter-case
The 27% upside is a brokerage target, not evidence of improving cash flows. With larger earnings contributions expected only after FY29, investors face years of execution, capex and hotel-demand risk. A 12-year valuation low may reflect those risks rather than mispricing, particularly if current earnings are cyclically elevated.