ITC Hotels trades higher for 3rd straight day; up 3% in subdued market

In Q3FY25, ITC Hotels Ebitda margin expanded by 450 bps Y-o-Y driven by higher RevPAR or Revenue per Available Room, operating leverage and strategic cost management initiatives

ITC Hotels share price moved higher by 3 per cent to Rs 177.50 on the BSE in Friday's intraday trade, extending its past two days' gain, in an otherwise subdued market. In comparison, the BSE Sensex was down 0.67 per cent at 77,532 at 2:33 PM.

 

In three days, the stock price of ITC Group company has rallied 8 per cent after ITC Hotels stock was removed from the benchmark Sensex and other BSE indices. The company, which was spun off from ITC, had been temporarily included in the Sensex and other indices to facilitate portfolio rebalancing by passive funds.

 

 

ITC Hotels, which was recently demerged from the ITC businesses, began trading in the stock markets on January 29. It had hit a high of Rs 189 on listing day and low of Rs 160.55 on February 5.

 

Currently, the stock is trading under the 'T’' group on the BSE. The 'T' group is a surveillance measure that requires securities to be settled on a trade-to-trade basis. BSE said the trading in the equity shares of ITC Hotels shall be permitted under 'B' group with effect from w.e.f. Tuesday, February 11, 2025.

 

Operating across all hospitality segments, ITC Hotels showcases a diverse portfolio of hotels through 6 vibrant brands – including ITC Hotels and Mementos in the luxury space, Welcomhotel in upper upscale, Storii in boutique premium experiential segment, Fortune in midscale and WelcomHeritage in heritage leisure. This multi-dimensional approach enables ITC Hotels to cater to a wide spectrum of travellers seeking a variety of experiences.

 

In the October to December 2024 quarter (Q3FY25), ITC Hotels reported its best-ever quarterly performance. The business delivered stellar performance during the quarter with revenue at Rs 922 crore, which grew by 14.6 per cent year-on-year (Y-o-Y) on a high base. Profit before tax, meanwhile, stood at Rs 302 crore, up 43.4 per cent Y-o-Y, driven by the retail, wedding, and food & beverages (F&B) segments.

 

Earnings before interest, tax, depreciation and amortisation (Ebitda) margin expanded by 450 bps Y-o-Y driven by higher RevPAR or Revenue per Available Room, operating leverage and strategic cost management initiatives.

 

The company said ITC Ratnadipa (opened in April 2024) at Colombo, Sri Lanka, continues to garner excellent response and achieved cash breakeven at the operating profit level during the quarter.

 

In line with the 'asset right' strategy of the business, five managed properties with 330 keys were operationalised during the quarter. The pipeline of managed properties continues to be strengthened across Welcomhotel, Mementos, Storii, Fortune and WelcomHeritage brands.

 

The Hotels segment delivered strong quarters with F&B, Retail & Wedding segments driving growth. Outlook remains strong given rising RevPAR and occupancy levels, analysts at PL Capital said.

 

Going ahead, apart from company specific factors, tailwinds such as recovery in Indian hospitality, lower penetration of hotels compared to other countries, demand outpacing supply and government support for tourism and infra will aid the hotel business to deliver strong performance in the coming years, according to analysts.

 

ITC Hotels, boasts a diverse portfolio of six brands, including two recent additions in the luxury segment: Storii and Mementos. With a strong presence in major cities, the company is strategically expanding into Tier 2/3 markets. While 80 per cent of its owned rooms are currently concentrated in top metros, ITC Hotels is shifting its focus towards managed properties.

 

This strategy is evident in its ambitious growth plan: to increase its room inventory from 13,000 to 18,000 keys within the next 4-5 years. This expansion will be driven by a significant increase in managed hotels, with over 95 per cent of new additions falling under this category. Over the next five years, managed hotel mix will improve to ~65 per cent from current 55 per cent, Mirae Asset Sharekhan said.