November 13, 2025
Imagine a company that was struggling with mounting debt, stagnant revenues and operational inefficiencies a decade ago.
Fast forward to today, and it is now posting record profits and has a debt-free balance sheet.
Moreover, it has an ambitious plan to double its size over the next six years.
The company in question is Indian Hotels (IHCL), the hospitality powerhouse behind iconic brands Taj Hotels, Vivanta, SeleQtions and Ginger.
Once burdened by an asset-heavy, low-margin model, IHCL has achieved a remarkable turnaround. It has delivered revenue growth, cost efficiency and an asset-light expansion strategy that has positioned it for long-term sustainable growth.
While IHCL may be a classic example of a forgotten stock in the hospitality sector, the sector itself has faced massive headwinds for almost a decade.
From 2008 to 2020, India’s premium hotel sector remained stagnant. Average room rates (ARRs) stagnated. The room supply slowed down. Developers backed off. Capital dried up.
Then came Covid. The pandemic has wiped out occupancy rates and further reduced room rates. For almost thirteen years, between 2008 and 2021, average room rates (ARRs) for premium hotels in India have barely changed.
Meanwhile, replenishment of room supplies was slow. Companies had no incentive to add rooms, given the low returns. The national room inventory grew at a moderate CAGR of 6% during this period.
Even as travel picked up in late 2010, hotels lacked pricing power. The occupancy rate remained between 60 and 65%. Operating leverage was weak. The balance sheets were overloaded.
The pandemic forced a reckoning.
In FY21, nationwide occupancy fell to 33% and ARRs fell below Rs 4,000. It was the lowest revenue base in twenty years.
But something changed in 2022. And that change has continued into 2025, driven by sustained domestic demand tailwinds, a disciplined supply-side response and improved operating leverage.
India’s travel behavior has changed. Leisure traffic has been normalized. Spiritual and wellness tourism is booming. Business travel is on the rise again. ARRs have grown 60-70% in two years.
Rising middle class incomes, improved air connections and ambitious spending have structurally increased demand.
Moreover, only 15,000 new rooms will have been added by 2024. National brand inventory remains below 190,000. The supply of additional rooms remains below the growth in demand. And that’s why hotel stocks like IHCL have both pricing power and premium valuations.
Indian Hotels’ share price has risen 891% in the past five years, after languishing for a decade.
The forgotten stock has become a multibagger. Discover the big difference in returns for yourself!
Forgotten stocks have become multibaggers
| Profit from April 2010 until March 2020 | Profit as of April 2020 until September 2025 | |
|---|---|---|
| Indian hotels | 14% | 891% |
| M&M | 28% | 976% |
Even as the company expanded capabilities, invested in subsidiaries and launched products, its consolidated financials did not reflect shareholder wealth creation.
But as in the case of IHCL, the pandemic also forced a rethink for M&M. Several changes in strategies helped the stock make up for the lost decade.
In the world of investing, attention is a powerful currency.
Stocks that capture the market’s imagination can generate high valuations, while stocks that fall out of favor often lag behind, regardless of their underlying financial health. These are the forgotten shares.
A forgotten stock could be a solid company at its core that has simply been overlooked by the majority of investors, a phenomenon driven more by market psychology than poor business performance.
Large brokerage firms and research firms typically focus their resources on companies that generate more transaction fees and media attention. This leaves the less exciting stocks out of coverage.
Very little information is disseminated about them, further reinforcing their status as ‘forgotten’. Finally, their valuation is often separate from their intrinsic value.
Another defining characteristic of a forgotten stock is its low trading volume. Unlike hot stocks, where millions of shares change hands every day, these companies trade infrequently. This lack of liquidity is a direct result of minimal investor interest.
But the most critical element of a forgotten stock is the time correction in valuations.
Even if earnings per share rise, from say Rs 10 to Rs 50 in a decade, if the stock price languishes at Rs 1,000, the price-to-earnings ratio falls from 100 to 20.
Moreover, the company may be slow and steady in an unglamorous industry such as chemicals, which may fail to make headlines without policy changes.
Finally, collective amnesia toward a stock may be caused by a recent, but temporary, negative event, such as a disappointing earnings report or a market-wide downturn that causes a temporary dip in confidence.
Investors may impatiently sell and move on, without seeing the company’s long-term resilience.
Forgotten shares are therefore not necessarily bad investments. In most cases, they are entities that have failed to attract the attention of investors for a long time.
While chasing the latest trend can be exciting, value investors understand that real opportunities often lie in the stocks everyone else has forgotten.
Having the patience to keep these companies afloat requires a disciplined approach. You must be willing to look past the noise and focus on fundamental value.
Similar is the story of several blue-chip stocks that have witnessed a long-term correction.
Private sector banks like HDFC Bank and Kotak Mahindra Bank.
FMCG giants like HUL stock.
Engineering majors like Larsen & Toubro.
Sustainable consumer products such as Titan Company and Pidilite.
Technology stocks like TCS, Infosys and HCL Technologies.
Check out the Equitymaster Screener to assess which of these could potentially become multibaggers.
Kind regards,
Tanushree Banerjee
Editor, StockSelect
Equitymaster Research Private Limited (formerly Equitymaster Agora Research Private Limited) (Research Analyst)
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