Shares of ITC Hotels Ltd, the demerged hotels business of ITC Ltd, got listed at Rs 188 on BSE and Rs 180 on NSE. This was higher that the Rs 140-175 range that analysts anticipated earlier for the stock. The hotelier commanded a market capitalisation (m-cap) of Rs 39,126.02 crore at the BSE listing.
As the session progressed, ITC shares were trading 2.66 per cent lower than the listing price at Rs 183 on BSE. On NSE, the ITC hotels stock was trading at Rs 179.10, down 0.50 per cent.
The ITC Hotels stock had settled at Rs 270 (implied price) in the special pre-open session on BSE and Rs 260 in the special pre-open session on NSE, earlier this month. ITC Hotels will now be removed from all NSE and BSE indices, after three business days.
What ITC management says
Sanjiv Puri, Chairman, ITC Hotels Ltd. said, “Today is indeed a landmark moment in ITC’s journey. Listing of ITC Hotels marks not just a new chapter for the ITC Group’s hospitality business but a bold step forward in our commitment to creating enduring value for all stakeholders. As ITC Hotels embarks on this new journey, it is committed to achieving new global benchmarks in hospitality while staying rooted in its vision of sustainability and inclusivity. As we do so, ITC Hotels is also committed to enriching the tourism landscape of India contributing to the nation’s goals for a Viksit Bharat.”
Anil Chadha, Managing Director, ITC Hotels Ltd.said, “Today is a time in history when we want to reinforce our commitment to building one of India’s finest hospitality chains that will redefine the future of hospitality. ITC Hotels carries a history built on trust, innovation and pride. As we look ahead, ITC Hotels is ready to take bold strides as an independent, agile and pure play hospitality entity. We aim to be a global leader in Indian hospitality driven by ourcore ethos of customer centricity, high performance and steadfast commitment to sustainability.”
ITC expansion plans
ITC Hotels aims to expand its portfolio to over 200 properties with more than 18,000 keys by 2030E, with a shift in the owned-to-managed ratio to 35:65. "We project a revenue/Ebitda/PBT CAGR of 15 per cent/18 per cent/17.2 per cent over FY24-FY27E, with an expected EBitda margin of 36.0% in FY26E and FY27E. This growth is underpinned by a strong expansion strategy and favorable trends within the hospitality sector. With a debt-free balance sheet and robust cash flow generation, ITC Hotels Ltd is well-positioned to capitalise on value-accretive M&A opportunities," DevenChoksey Research said.
Over the past decade, ITC Hotels has posted impressive growth, with revenue, Ebitda, and EBIT expanding at compound annual growth rates (CAGR) of 10 per cent, 14.6 per cent, and 18.0 per cent, respectively. As of FY24, Ebitda margin was a healthy at 34.4 per cent.
"The hotel business contributed 4.1 per cent of ITC’s overall revenue in FY24, while EBIT contribution from the segment was 3 per cent. The average Room Rate (ARR) has increased from Rs 7,900 in FY19 to Rs 12,000, up 51.9 per cent (CAGR growth of 8.7 per cent). Revenue Per Available Room (RevPAR) increased from Rs 5,200 in FY19 to Rs 8,200 in FY24, up 57.7 per cent, DRChoksey Research said.
The brokerage noted that the management fee income has been a notable driver of growth, with a CAGR of approximately 21 per cent over the last five years. ITC Hotel's revenue composition for FY24 reveals that 52 per cent came from room sales, 40 per cent from food and beverage, with the remainder attributable to other revenue streams.
The brokerge said the demerger of ITC's hotel business unlocks value by allowing ITC to focus on its high-margin, cash-generative core segments, while the standalone hotels entity gains flexibility to capitalise on industry growth and attract strategic investors.