ITC Hotels listed on Wednesday with shares opening at Rs 188 on BSE and Rs 180 on NSE and with a market cap of around Rs 39,000 crore for 37 lakh ITC shareholders. The stock hit 5% lower circuit at Rs 178.60 soon after listing due to profit booking.
Listing price was below the January 6 special price-discovery session where the stock was valued at around Rs 260 on Nifty and Rs 270 on BSE.
100 shares of ITC Hotels will cost ITC shareholders Rs 54,040.
Demerger arrangement keeps ITC’s 40% stake in the new hotel company and distributes 60% to shareholders in 10:1 ratio.
According to Akriti Mehrotra, Research Analyst at StoxBox, shareholders who got ITC Hotels shares should hold them for medium to long term.
ITC Hotels operates 140 hotels across 90+ locations and is a major player in Indian hospitality space with six brands: ITC hotels, Mementos, Welcom hotel, Storii, Fortune and Welcom Heritage.
"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 said.
The company expects growth to be sustained by demand growth, limited supply and expansion plans of 28 hotels in 24 months and 200+ hotels in 5 years. This growth strategy is asset light and will support long term revenue growth and margin improvement.
Average Room Rate has grown from Rs 7,900 in FY19 to Rs 12,000 and Revenue Per Available Room has grown from Rs 5,200 to Rs 8,200 between FY19 and FY24.
FY24 revenue breakup is 52% from room sales, 40% from food and beverage and rest from other services.
SBI Securities says temporary price correction is an opportunity for retail/HNI investors to buy this quality business for long term.
"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.
