ICRA has upgraded The Indian Hotels Company Limited’s (IHCL) long-term rating for its Rs. 15 crore fund-based facilities from [ICRA]AA+ (Stable) to [ICRA]AAA (Stable). The short-term rating of [ICRA]A1+ was reaffirmed. The upgrade reflects the strengthening of IHCL’s business and financial risk profiles, driven by its dominant market position, robust revenue growth (CAGR of 40% FY22-FY25), and healthy operating margins, which stood at 33.2% in FY2025.
ICRA Revises Credit Rating for IHCL
The Indian Hotels Company Limited (IHCL) announced a significant revision in its credit ratings by ICRA, effective February 20, 2026. The long-term rating assigned to the Rs. 15 crore long-term fund-based facilities has been upgraded from [ICRA]AA+ (Stable) to [ICRA]AAA (Stable). Concurrently, the short-term rating for fund-based facilities (sub-limit of Rs. 15.00 crore) has been reaffirmed as [ICRA]A1+.
Rationale for Rating Upgrade
The upgrade is primarily driven by the strengthening of IHCL’s business and financial risk profiles as the dominant player in the Indian hospitality sector. Key performance indicators supporting this revision include:
- Revenue Growth: Consolidated operating income stood at Rs. 8,334.5 crore in FY2025, achieving a Compound Annual Growth Rate (CAGR) of 40% over FY2022-FY2025, sustained by strong domestic leisure and business travel demand.
- Profitability: Consolidated operating margins were robust at 33.2% in FY2025 and 32.1% in 9M FY2026, significantly surpassing pre-Covid margins of 21.7% (FY2020).
- Financial Profile: The capital structure and coverage metrics remain comfortable, supported by a strong liquidity profile. The company became net cash positive since FY2022 following a significant equity infusion of Rs. 3,982.0 crore in FY2022.
Key Strengths Supporting Ratings
The rating affirmation and upgrade are strongly supported by several key factors:
Strong Parentage and Financial Flexibility
The Tata Group holds a substantial stake of 38.12% in IHCL through Tata Sons. ICRA notes the expectation that Tata Sons will continue to provide timely and adequate financial support if required, enhancing IHCL’s financial flexibility and lender comfort.
Market Dominance and Diversification
IHCL operates 361 hotels with 32,296 rooms across eight major brands. The portfolio benefits from geographic diversification across 13 countries and segmentation across luxury, upscale, and midscale tiers, mitigating localized market risks. The company is also expanding its footprint through an asset-light strategy, with approximately 80% of the pipeline expected to be under management contracts.
Liquidity and Capital Management
Liquidity is deemed Strong, supported by anticipated annual operating cash flows of Rs. 2,100-2,200 crore and unencumbered cash and investments exceeding Rs. 3,500.0 crore as of December 31, 2025.
Credit Challenges Noted
Key challenges noted by ICRA include the inherent vulnerability of revenues to industry cyclicality and macroeconomic shocks. Furthermore, the company faces an ongoing lease rental dispute with the Mumbai Port Trust (MPT) concerning the Taj Mahal Palace & Tower, Mumbai, where an adverse verdict could result in a significant cash outflow (MPT claimed an additional rent of Rs. 1,874.0 crore from FY2007).
Summary of Rating Action
The ratings for the Rs. 15.00 crore long-term facility were upgraded, reflecting strong business performance, while the short-term rating was reaffirmed.
Financial Snapshot (Consolidated Audited)
| Metric | FY2024 (Rs. crore) | FY2025 (Rs. crore) |
| Operating Income | 6,768.8 | 8,334.5 |
| PAT | 1,201.6 | 1,961.3 |
| OPBDIT/OI | 31.9% | 33.2% |
| Total debt/OPBDIT (times) | 1.3 | 1.1 |
Source: BSE
