By Manu Vardhan Kannan
Published on January 31, 2025
ITC Hotels made its debut on the stock market with shares opening at INR 188 on the BSE and INR 180 on the NSE, marking a significant milestone for ITC shareholders. The company's market capitalization stood at approximately INR 39,000 crore. However, soon after listing, the stock experienced a 5% dip, touching INR 178.60, attributed to profit booking.
The listing price came in lower than market expectations set earlier on January 6, when special price discovery sessions had valued the stock at around INR 260 on Nifty and INR 270 on the BSE. Under the demerger scheme, ITC retained a 40% stake in the newly independent hotel entity, while the remaining 60% was allocated to shareholders in a 10:1 ratio. Investors who received these shares are advised to consider a medium to long-term holding strategy, according to Akriti Mehrotra, Research Analyst at StoxBox.
ITC Hotels, a major player in India’s hospitality industry, operates 140 hotels across 90+ locations under six brands: ITC Hotels, Mementos, Welcomhotel, Storii, Fortune, and WelcomHeritage. Positioned across the luxury to midscale segments, the company is set to benefit from the rising demand in the tourism sector.
In Q2FY25, ITC Hotels recorded a 12% year-on-year revenue growth, while its EBITDA margin improved by 70 basis points. This growth has been driven by higher revenue per available room (RevPAR), operating leverage, and strategic cost management. Looking ahead, the company plans to add 28 hotels in the next 24 months, targeting over 200 properties in five years. This expansion follows an asset-light model, ensuring steady revenue growth and margin improvements.
The company's Average Room Rate (ARR) increased from INR 7,900 in FY19 to INR 12,000, reflecting a 51.9% surge, while RevPAR saw a 57.7% rise, moving from INR 5,200 in FY19 to INR 8,200 in FY24. Revenue distribution for FY24 showed that 52% came from room sales, 40% from food and beverage, and the remainder from other services.
SBI Securities suggests that any short-term pressure on ITC Hotels’ stock price could present an opportunity for retail and high-net-worth investors to accumulate shares for long-term gains. The brokerage firm believes ITC Hotels has the potential to outperform ITC Ltd over the medium to long term, despite short-term volatility caused by ETF exits. With a strong pipeline of hotel additions and favorable industry conditions, ITC Hotels is well-positioned for sustained growth in the Indian hospitality sector.
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