Oriental Hotels makes a corporate announcement

Approved ratio: OHL shareholders will receive 25 IHCL shares for every 117 OHL shares, or 0.21368 IHCL share per OHL share, in an all-stock merger ^[1].

A precise rupee valuation and numeric multiples require the IHCL share price used as the valuation reference. That price is not reported in the cited merger materials. The implied valuation can therefore be expressed as follows:

• Implied OHL value per share: 0.21368 × IHCL share price.
• Book-value comparison: OHL’s latest consolidated book value per share was Rs 43.93 as of Q2 FY27 ^[2]. The swap equals book value when IHCL trades at approximately Rs 205.59 per share, calculated as Rs 43.93 × 117 / 25. Thus, an IHCL price above Rs 205.59 would imply a premium to OHL’s recent book value; below it would imply a discount.
• Trailing EV/EBITDA comparison: OHL had TTM Q2 FY27 consolidated EBITDA of Rs 136.32 Crores ^[3], net debt of Rs 74.80 Crores ^[4], and 17,85,99,180 shares outstanding as of June 30, 2026 ^[5]. If `H` is the IHCL share price in rupees, the implied OHL equity value is approximately Rs 3.8162 × H Crores, and:

`Implied EV/EBITDA = (3.8162 × H + 74.80) / 136.32`

or approximately 0.0280 × H + 0.5487 times.

For orientation, at the Rs 205.59 IHCL price that makes the swap value equal to OHL’s latest book value, the implied trailing EV/EBITDA would be approximately 6.30 times. A final comparison with the actual prevailing multiple cannot be confirmed without the relevant IHCL share price. Contemporaneous coverage described the ratio as valuing OHL at an approximately 8.5% premium to its previous close ^[6].

The merger should have only a modest impact on IHCL’s leverage, but it would dilute consolidated EBITDA margin slightly unless IHCL’s operating synergies and asset upgrades offset OHL’s lower current profitability. On a mechanical Q2 FY27 basis, gross debt-to-equity would move from about 0.01x to approximately 0.014x, while EBITDA margin would move from 31.7% to approximately 31.3%. On a TTM basis, the margin dilution is also around 0.4 percentage points.

Leverage impact

The transaction is structured as an all-stock merger, with approximately 2.32 Crores IHCL shares to be issued, equivalent to around 1.6% dilution. The appointed date is April 1, 2027, with completion targeted for the second half of FY28, subject to regulatory, shareholder and NCLT approvals. Therefore, there is no immediate balance-sheet impact. ^{[7] [8]}

At Q2 FY27:

• IHCL had total debt of Rs 115.72 Crores and equity of Rs 13,640.0 Crores, implying gross debt-to-equity of 0.01x. ^{[9] [10] [11]}
• OHL had total debt of Rs 79.38 Crores and equity of Rs 784.66 Crores, implying gross debt-to-equity of 0.10x. ^{[12] [13] [14]}

A simple mechanical combination gives debt of Rs 195.10 Crores and equity of Rs 14,424.66 Crores, or approximately 0.014x debt-to-equity. This is an illustrative calculation, not the final post-merger accounting ratio, because IHCL already owns approximately 37.1% of OHL as an associate and the merger will involve elimination of the existing investment, share issuance and merger accounting adjustments. ^[15]

Implication: OHL’s debt would rise on IHCL’s balance sheet, but the absolute increase is small relative to IHCL’s equity base. The reported ratio would likely still round to 0.01x, unless the property upgrades are funded materially through new borrowing. IHCL also reported gross cash of Rs 4,369 Crores as of September 30, 2026, which provides a substantial liquidity buffer. ^[16]

EBITDA-margin impact

OHL is currently less profitable than IHCL:

• On a TTM Q2 FY27 basis, IHCL reported revenue of Rs 10,430.8 Crores, EBITDA of Rs 3,726.8 Crores and EBITDA margin of 35.7%. ^{[17] [18] [19]}
• OHL reported revenue of Rs 504.94 Crores, EBITDA of Rs 136.32 Crores and EBITDA margin of 27.0%. ^{[20] [3] [21]}

Adding the two businesses mechanically produces revenue of Rs 10,935.74 Crores and EBITDA of Rs 3,863.12 Crores, implying a combined EBITDA margin of approximately 35.33%, around 0.4 pp below IHCL’s standalone consolidated margin.

The latest quarter shows a similar result: OHL’s Q2 FY27 EBITDA margin was 23.5%, versus 31.7% for IHCL. ^{[22] [23]} OHL therefore adds only about 4.5% of the combined quarterly revenue but comes in roughly 8 pp below IHCL’s margin, resulting in modest dilution rather than a material step-down.

IHCL’s investor presentation targets a post-merger EBITDA margin above 30%, indicating that management expects the combined portfolio to remain strongly profitable, although the presentation does not provide a quantified synergy bridge. ^[24]

Capex and portfolio considerations

OHL’s FY26 capital expenditure was Rs 34.74 Crores, equivalent to 7.0% of revenue, while IHCL’s FY26 capex was Rs 1,036.6 Crores, or 10.7% of revenue. ^{[25] [26] [27] [28]}

OHL brings seven hotels and 825 rooms, including three freehold properties and four long-tenure leasehold properties. Major asset-enhancement initiatives had already been completed across key hotels, but IHCL has also identified further strategic investments in inventory expansion and product enhancements. ^{[29] [30] [29]}

The future capex amount and funding mix could not be confirmed from the cited materials. The analytical distinction is important:

• Cash-funded capex: limited immediate effect on debt-to-equity, but reduces IHCL’s cash balance.
• Debt-funded capex: increases leverage from the currently very low base.
• Renovation or expansion execution: can temporarily pressure EBITDA through closures, ramp-up costs and operating inefficiencies, even though capex itself is not an EBITDA expense.

Overall: the consolidation is unlikely to create a meaningful leverage problem for IHCL. The nearer-term financial effect is a small margin dilution from absorbing OHL’s lower-margin operating base; the larger medium-term variable is whether IHCL can use its balance sheet and operating platform to lift OHL’s assets toward IHCL’s margin profile while funding the required refurbishment and expansion without materially increasing debt.

The merger is not yet effective; the boards approved the scheme on 24 August 2026, after which the following milestones remain. ^[31]

Required approval milestones

1. Stock-exchange and SEBI review: The scheme must receive the requisite regulatory clearances from the stock exchanges and SEBI. The scheme is to be submitted to the stock exchanges before being made available on OHL’s website. ^[31] 2. NCLT sanction: The relevant bench of the National Company Law Tribunal must sanction the Scheme of Arrangement. ^[31] 3. Shareholder and creditor approvals: OHL and IHCL must obtain the requisite approvals from their respective shareholders and/or creditors, where applicable and as directed by the NCLT. ^[31] 4. Other statutory approvals: Any additional regulatory or statutory approvals required for implementation must also be obtained. ^[31]

Indicative timeline

• Appointed date: 1 April 2027. ^[1]
• Target completion/effectiveness: The transaction is targeted for the second half of FY2028, which corresponds broadly to October 2027–March 2028 under the Indian fiscal calendar. ^[1]

The company has provided a target window rather than a fixed effective date; actual effectiveness remains conditional on the approval sequence and the NCLT’s process.