ITC Hotels Shares Surge 6% to Record High on Macquarie’s “Outperform” Rating

Strong Market Momentum Lifts ITC Hotels to New Highs

Shares of ITC Hotels soared 6% on March 28, hitting a fresh all-time high of ₹206 per share, after Macquarie initiated coverage with an “outperform” rating. The global brokerage firm has set a target price of ₹230, implying an additional 11% upside from current levels. Since ITC Hotels’ listing on January 29, following its demerger from ITC Ltd, the stock has gained 16%, reflecting strong investor confidence in the hospitality sector’s growth prospects.

The rally in ITC Hotels’ stock comes amid rising optimism about India’s hospitality sector, with analysts citing favorable macroeconomic conditions, increasing domestic tourism, and a sustained industry upcycle. Notably, all three analysts tracking ITC Hotels have issued a “buy” rating, underscoring the stock’s strong growth potential.

• ITC Hotels’ stock surge on March 28: 6% increase

• New all-time high: ₹206 per share

• Upside potential based on Macquarie’s target: 11% to ₹230

• Total gains since January 29 listing: 16%

ITC Hotels: India’s Second-Largest Domestic Lodging Chain

Macquarie analysts emphasized that ITC Hotels is India’s second-largest domestic lodging company, with a strong presence in Tier-1 cities and a focus on upscale hospitality. The company’s brand strength, coupled with its luxury portfolio and high-end food and beverage offerings, positions it as a strong competitor to Indian Hotels Ltd (Taj Hotels).

The brokerage firm highlighted that ITC Hotels is well-positioned to capitalize on India’s growing tourism industry, which has seen a sharp rebound post-pandemic. With increasing domestic and international travel, the demand for premium and luxury accommodations continues to rise, driving revenue and profitability for established players like ITC Hotels.

• Market positioning: Second-largest domestic hotel chain in India

• Strategic focus: Luxury and premium segments

• Key competitor: Indian Hotels Ltd (Taj Hotels)

• Growth driver: Rising domestic and international tourism demand

Valuation Gap Expected to Close as Business Strengthens

Macquarie analysts believe that ITC Hotels is currently undervalued compared to its peers, but this valuation gap is expected to narrow over time. As the company expands its portfolio, builds a stronger financial track record, improves market awareness, and optimizes its balance sheet, investors could see a re-rating of the stock.

Currently, ITC Hotels’ valuation lags behind industry benchmarks, primarily due to its recent demerger and the absence of a long-term standalone financial track record. However, as the company demonstrates consistent revenue growth, operational efficiency, and profitability improvements, the stock is likely to attract greater institutional interest and premium valuations.

• Current valuation: Undervalued compared to industry peers

• Key factors driving valuation re-rating: Portfolio expansion, financial transparency, and improved market perception

• Long-term outlook: Higher investor confidence as historical financials strengthen

Free Cash Flow Set to Improve with Asset-Light Expansion

One of the key catalysts for ITC Hotels’ future growth is its improving free cash flow (FCF), driven by lower capital expenditures, stabilization of existing assets, and an asset-light expansion strategy. Macquarie projects a significant increase in the company’s Return on Capital Employed (ROCE), which is expected to rise from 8% to 14% in the coming years.

The asset-light model, which focuses on expanding through management contracts rather than owning properties, is a proven strategy adopted by global hospitality giants. By reducing the need for heavy capital investment in real estate, ITC Hotels can achieve higher profitability margins while maintaining a strong growth trajectory.

• Projected ROCE improvement: From 8% to 14%

• Key drivers of free cash flow growth: Reduced capital expenditure and asset-light expansion

• Industry trend: Asset-light model adopted by leading global hospitality brands

Ambit Capital Also Bullish on ITC Hotels’ Future

Ambit Capital, another prominent brokerage, has also issued a “buy” rating for ITC Hotels, echoing Macquarie’s positive outlook. The firm has set a target price of ₹230 per share, aligning with Macquarie’s valuation estimates.

Ambit analysts pointed out that India’s hospitality sector remains in a structural upcycle, supported by economic growth, rising disposable incomes, and increasing corporate travel. They highlighted ITC Hotels’ premium brand positioning, strong food and beverage reputation, and operational efficiencies as key factors that will drive long-term shareholder value.

The brokerage also emphasized ITC Hotels’ focus on scaling its owned assets while expanding through an asset-light model, further reinforcing its ability to achieve sustainable earnings growth.

• Ambit Capital’s rating: Buy

• Target price: ₹230 per share

• Key investment thesis: Industry upcycle, strong brand equity, and asset-light expansion

Luxury Portfolio and Market Positioning Strengthen Investment Case

Analysts note that ITC Hotels’ luxury brand portfolio is among the strongest in India, featuring iconic properties like ITC Maurya, ITC Grand Bharat, and ITC Grand Chola. The company’s premium offerings in food and beverage have helped differentiate its hotels from competitors, making it a preferred choice for high-end travelers and corporate clients.

By maintaining its focus on the upscale and luxury segments, ITC Hotels is positioned to capture premium pricing power, ensuring higher revenue per available room (RevPAR) and better occupancy rates.

• Flagship properties: ITC Maurya, ITC Grand Bharat, ITC Grand Chola

• Competitive advantage: Strong food and beverage offerings

• Revenue driver: Higher occupancy rates and premium pricing power

Investor Confidence Grows as ITC Hotels Expands

The latest 6% surge in ITC Hotels’ stock reflects strong investor confidence in its growth trajectory, fueled by bullish brokerage recommendations and improving financial fundamentals. As the company continues to expand its footprint, optimize costs, and improve profitability metrics, analysts expect sustained growth momentum in the stock.

With both Macquarie and Ambit Capital maintaining a “buy” rating, and a projected 11% upside from current levels, ITC Hotels remains one of the most promising stocks in India’s hospitality sector.