(IHCL) could outperform its upgraded growth guidance if geopolitical tensions in West Asia ease, according to Managing Director & CEO Puneet Chhatwal, who said the company's airline catering and international hotel businesses stand to benefit from improving travel demand.

Chhatwal said the company remains optimistic about the second half of the current financial year 2026-27 (FY27) after reporting strong July-September 2026 quarter performance. While IHCL has raised its revenue growth guidance to 15-17%, he indicated there could be further upside if international travel conditions improve.

He also downplayed the contribution of the BRICS Summit to the company's recent performance, saying the event had only a limited impact because of IHCL's diversified portfolio.

As of 11:34 am, IHCL shares were trading at ₹785.90 on the NSE, giving the company a market capitalisation of ₹1.12 lakh crore.

The hotel business continues to guide for 17-19% revenue growth, although Chhatwal cautioned that comparisons will become tougher because the previous year's fourth quarter benefited from events such as the UN General Assembly. He added that the ongoing conflict in West Asia has affected airline catering and international hotel operations in cities including London, Frankfurt, New York and Cape Town due to disruptions in Middle East connectivity.

He also highlighted IHCL's stronger balance sheet, noting that the company now has significant cash reserves and no debt, enabling it to pursue growth opportunities during market cycles. According to Chhatwal, businesses such as TajSATS and Ginger Hotels are nearing meaningful scale, with TajSATS approaching ₹1,500 crore in revenue and Ginger nearing the ₹1,000 crore mark.

[faq type="interview" title="This is an edited transcript of the interview."][ques][/ques][ans][/ans][/faq][faq type="interview"][ques]How much of the recent growth was driven by the BRICS Summit in Delhi, and beyond these marquee events, how sustainable is the demand momentum?[/ques][ans]Delhi did help. The BRICS Summit did help, but not as much because our base is very large. We're not like 10, 15, or 20 hotels where one hotel performing strongly would have such an important impact on the portfolio.

Having said that, even if we were to take that BRICS impact out, you would still be talking about 16% top-line growth, which is very good in absolute numbers for us.[/ans][/faq][faq type="interview"][ques]The hallmark this time around has been the fact that you've upped your guidance, but those who've been looking at your performance quarterly are not necessarily surprised, and definitely the ones who have been watching us here on CNBC-TV18 are not surprised as well because we've constantly been asking you whether you are under-guiding and overperforming and over-delivering.

You've gone ahead and done that as well. Now, 15% to 17%. What's the upside here?[/ques][ans]The upside is definitely the airline catering business because for the hotel segment we said it would do 17% to 19%. If the airline sector starts to perform better on the international front, and if the West Asia crisis subsides, then definitely we could do much better than 15% to 17%.[/ans][/faq][faq type="interview"][ques]17% to 19% is the hotel business here as well.

If I back-calculate the numbers, considering that more than 60% comes in the second half, I look at what you've done in the first half and then do an iteration on that. It's actually a 20%-plus year-on-year growth. So, are you still, even at 17% to 19%, under-guiding the Street?[/ques][ans]Not really. The fourth quarter of last year was an exceptional quarter, especially for the Taj Mahal Hotel in Delhi. Also, it was an exceptional year when it comes to the UN General Assembly (UNGA) in September, which has already gone by.

But many other factors also contributed, with certain other events happening, so I think the base is very large. That's number one. And the West Asia crisis not only has an impact on the airline catering business, but also on our businesses in London, Frankfurt, New York, and Cape Town, where the international connectivity, especially through the West Asia, has been very strong for us. Of course, there are other ways to connect. You're not only going through Abu Dhabi or Dubai, but it still has an impact. And if that crisis were to subside, we could do much better than what we have guided for.[/ans][/faq][faq type="interview"][ques]Obviously, a lot of things are not under your control, but what is something that you've guided for.

Let's speak about the costs as well. Have you seen a concomitant increase in costs on account of that? We've seen margin expansion, but are there further levers?[/ques][ans]Absolutely.

There are always further levers as the cost of utilities has gone up, fuel costs have gone up, and the cost of running generators for electricity has gone up. But having said that, our sector has been through the worst crisis in its history with COVID, when revenues fell to zero. So, the sector, per se, has learned quite well how to deal with costs and the inflation pressures that might come along with them. So, cost optimisation is something which is happening as we speak, also through the diversification of our portfolio.

We have diversified our portfolio over the last eight years in terms of brands, total revenue, geography, and the mix of contracts contributing to revenue. For example, if Dubai recovers, we have three hotels under management contracts. Those are very high-margin management fee income contracts where dollar income is converted to rupees, so that is also subdued.

But the good thing is that it's a potential upside whenever the crisis subsides, as the management fee income level will also go up. So, all in all, I would say costs are one factor, but more important is how to optimise revenue and diversify that base so that something is always working in your favour.[/ans][/faq][faq type="interview"][ques]This diversification also brings an interesting point from an analyst's standpoint.

Earlier, people would look at RevPAR and margins, but now, with you having diversified, you have to look at absolute revenue. You have to look at different parts of your revenue, and you obviously have to look at return on capital employed. Are there any other metrics that you think the Street should look at, which give a better, truer picture of the business performance, as against just pinning it down to RevPAR or margins, which may have been skewed by one or the other part of your business?[/ques][ans]That's a great question, Mangalam.

I think what is very important is the kind of cash reserves we have. If things were to go bad, as they did in 2020, at that time we had a lot of debt. We didn't have cash. We could not act. So, we are very well positioned to take advantage of any opportunities that might come our way. If cyclicality were to kick in, we have a very well-diversified topline. But having said that, even if the margins were to halve, without having any debt on our books, we'll still remain profitable.

So, all in all, we are quite pleased with the journey that has unfolded, but it has taken time. It has taken seven to eight years of consistent execution, or rather, relentless execution, and we are just a few quarters away from making many of our new businesses meaningful, with those businesses firing on all cylinders.[/ans][/faq][faq type="interview"][ques]Do you want to give some quantifiable data on what that meaningful would mean?[/ques][ans]By meaningful, TajSATS has reached almost ₹1,500 crore in revenue.

Ginger is getting close to ₹1,000 crore-plus in revenue, and together, TajSATS and Ginger would already provide more EBITDA than the entire Indian Hotels business generated in FY2017-18.[/ans][/faq] For the full interview, watch the accompanying video here