ITC Hotels share price zooms 11% to hit 52-week high on buoyant volumes, stock up 21% in one month: Time to buy?

ITC Hotels Share Price: Shares of newly-listed ITC Hotels zoomed 11 per cent in the previous session to hit a fresh all-time record-high amid a bullish trend in the Indian stock market on positive global cues. ITC Hotels, the demerged entity of India's leading fast-moving consumer goods (FMCG) major ITC Ltd, has logged a fresh uptrend with sharp buying interest in its counter this month ahead of the upcoming summer holiday season.

Listed companies with businesses in hotels, hospitality, airlines, and railways are logging a sharp gain in their stock prices, driven by increased consumer demand in the summer and attractive deals over price points for investors. The improved outlook and volumes have driven ITC Hotel's shares higher in March.

Also Read: ITC Hotels share price lists at ₹188 apiece on BSE, a discount of 31% to discovered price

ITC Hotels Share Price Trend

On Friday, shares of ITC Hotels opened at ₹184 and logged a sharp gain of 11 per cent to hit a fresh 52-week high of ₹204.45, before settling 8.38 per cent higher at ₹198.50 apiece on the BSE. According to stock exchange data, ITC Hotels commands a market capitalisation of ₹41,311.25 crore.

The hotel stock has risen 15 per cent in the last five sessions, in line with bulls gripping the frontline indices Nifty 50 and Sensex. The benchmarks zoomed over four per cent, logging their biggest weekly rise in four years.

ITC Hotels' share price has gained nearly 21 per cent in one month and 13 per cent year-to-date (YTD). On January 29, 2025, it made an IPO-less listing at ₹188 per share on the BSE, while on the NSE, it debuted at ₹180 - implying a discount to the stock's discovered price of ₹260 per share.

ITC holds a 40 per cent ownership of ITC Hotels, and ITC shareholders acquired the remaining 60 per cent in proportion to their stake in ITC Ltd.

ITC Share Price Outlook: Should you buy, sell, or hold?

According to domestic brokerage ICICI Direct Research, the hotel biz demerger will likely enhance shareholder value. With a favourable demand-supply scenario, ITC’s hotel business is expected to perform well in the coming years, backed by an asset-light growth strategy.

Also Read: Minority shareholders to benefit from ITC Hotels demerger, will unlock value and improve return ratio

ICICI Direct Research has given the ITC stock a ‘buy’ rating and a target price of ₹555. It eyes a potential upside of 15 per cent in the next 12 months.

"Post demerger, ITC’s stock price could be adjusted by ₹12-15/share. With a focus on the driving core, ITC's earning and return profile will improve in the long run. We recommend buying ITC with a target price of ₹555," said the brokerage.

ICICI Direct believes the demerger is a win-win for ITC’s shareholders. The demerged hotel business will continue to perceive asset right strategy to achieve the next league of growth in the company (revenues and EBIDTA to grow at CAGR of 14 per cent and 18 per cent over FY24-27E). ITC will provide institutional support through brand, governance and access to synergies.

Coming to ITC Hotels, ICICI Direct believes the structure of the investment rationale provides an opportunity to exit but estimates a long-term gain.

Also Read: ITC Demerger: Analysts remain optimistic amid strategic restructuring, see up to 29% upside potential in shares

"A strong debt-free balance sheet and cash flows will help businesses to raise capital for growth in the coming years. On the other hand, the return profile of ITC (excluding the hotel business) will improve substantially after the demerger," said the brokerage.

“Favourable cross-synergies will be created for FMCG business (including food and personal care). The structure also provides an opportunity to exit from the hotel business if it is not part of the investment strategy,” it added.

Foreign brokerage Jefferies initiated coverage on ITC Hotels Ltd last month with a 'Buy' rating, citing the potential for a valuation rerating. Jefferies has set a target price of ₹240 (upside potential of 40 per cent), noting that the current discount to Indian Hotels Co Ltd may narrow over time.

ITC Hotels Earnings and Valuation Outlook

Jefferies estimates ITC Hotels’ EBITDA and PAT to grow at a compounded annual rate of 16 per cent and 19 per cent, respectively, over FY24-27. The brokerage values the company’s hotel EBITDA at 30 times FY27 EV/EBITDA, compared to IHCL’s target valuation of 37 times EV/EBITDA.

Jefferies projects ITC Hotels’ revenue to expand at a 15 per cent CAGR over FY24-27. The revenue is expected to be driven by an 11 per cent CAGR in like-for-like (LFL) hotel revenues, supported by a six per cent CAGR in average room rates (ARR) and a nine per cent CAGR in revenue per available room (RevPAR) for owned properties. The recently commissioned Sri Lanka hotel, ITC Ratnadipa, may also contribute to revenue growth.

Also Read: What should investors expect from the ITC Hotels demerger?

ITC Hotels’ Competitive Edge and Expansion Plans

As the second-largest listed hotel chain in India operating under an owner-operator model, ITC Hotels boasts a well-diversified portfolio and a strong balance sheet. The company is currently ramping up underutilized greenfield projects, which account for 20 per cent of its total keys, informed Jefferies.

According to the brokerage, ITC Hotels' key advantage is its strategic alliance with Marriott International. Jefferies noted that ITC Hotels has an industry-leading direct distribution share of 80 per cent, which it aims to increase. It has an agreement with Marriott’s Luxury Collection brand, under which 15 ITC-branded hotels are marketed globally. The partnership enhances its global reach and strengthens its positioning in the premium segment.

Also Read: ITC dividend: FMCG giant declares second dividend of ₹6.50 for FY25; Record date fixed on THIS day

Jefferies expects ITC Hotels’ occupancy rate in India to improve from approximately 69 per cent in FY24 to 75 per cent in FY27. The brokerage also projects a nine per cent RevPAR CAGR over FY24-27, in line with historical trends. The company is well-positioned to benefit from sectoral tailwinds, including increasing domestic and international travel demand.

ITC Hotels currently operates 140 properties with over 13,000 keys across 90 locations. The company aims to expand its footprint to over 200 hotels with 18,000 keys in five years, with two-thirds of its properties operating under management contracts. It has launched 30 hotels in the past 24 months and plans to add at least one new hotel per month over the next two years.

Also Read: ITC Q2 Results: Net profit rises 3% to ₹5,078 crore, revenue up 17% YoY; 5 key highlights

Overall, Jefferies maintains a bullish outlook on ITC Hotels, citing its strong growth trajectory, sectoral tailwinds, and improving financial metrics. The brokerage expects a valuation rerating as it demonstrates independent performance post-demerger. “With a well-established brand presence, a strategic partnership with Marriott, and a robust expansion pipeline, ITC Hotels is well-positioned for long-term growth in the hospitality sector.”

Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies, not Mint. We strongly advise investors to consult with certified experts, consider individual risk tolerance, and conduct thorough research before making investment decisions, as market conditions can change rapidly, and individual circumstances may vary.