ITC Hotels stock listing: ITC Hotels made its market debut on Wednesday, with shares listing at Rs 188 on BSE and Rs 180 on NSE, achieving a market capitalisation of approximately Rs 39,000 crore, benefiting 37 lakh ITC shareholders. The shares hit the 5% lower circuit at Rs 178.60 shortly after listing due to profit taking.
The listing price fell below earlier expectations from the January 6 special price-discovery session, which had valued the stock at roughly Rs 260 on Nifty and Rs 270 on BSE indices.
The total acquisition cost for 100 shares of ITC Hotels amounts to Rs 54,040 for ITC shareholders.
The demerger arrangement maintains ITC's 40% ownership in the new hotel entity, whilst distributing the remaining 60% to shareholders at a 10:1 ratio.
According to Akriti Mehrotra, Research Analyst at StoxBox, shareholders who received ITC Hotels shares should consider retaining them for medium to long-term investment horizons.
Operating 140 hotels across over 90 locations, ITC Hotels stands as a prominent player in India's hospitality sector, managing six brands: ITC hotels, Mementos, Welcomhotel, Storii, Fortune and WelcomHeritage.
"Functioning in the luxury to midscale segment, ITC Hotels is set to capitalize on the growing tourism demand. The company registered a 12% YoY revenue growth in Q2FY25, and the EBITDA margin expanded by 70 basis points due to higher RevPAR, operating leverage, and strategic cost management," Mehrotra told ET.
The company anticipates sustained growth driven by increasing demand, limited supply, and expansion plans including 28 new hotels within 24 months, targeting 200+ properties in five years. This growth strategy employs an asset-light model, supporting long-term revenue growth and margin improvement.
The company's Average Room Rate increased from Rs 7,900 in FY19 to Rs 12,000, whilst Revenue Per Available Room rose from Rs 5,200 to Rs 8,200 between FY19 and FY24.
The FY24 revenue distribution shows 52% from room sales, 40% from food and beverage, with other services accounting for the balance.
SBI Securities suggests that temporary price declines present opportunities for retail/HNI investors to acquire shares in this quality business for long-term investment.
"Looking at the robust key addition pipeline for ITC Hotels and strong industry tailwinds, we believe ITC Hotels Ltd has potential to outperform ITC Ltd over a medium to long term period. In the short term, there is a possibility that few shareholders (especially ETFs) may have to forcefully exit ITC Hotels Ltd and this can create pressure on the stock price," the brokerage said.
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