ITC Hotels Ltd Q2FY26 | ₹839 Cr Sales, ₹133 Cr Profit – The Luxury Chain That Just Graduated From ITC’s Shadow With a 63x P/E Tag
1. At a Glance
Welcome to the freshly demerged, freshly independent ITC Hotels Ltd – a ₹46,000 crore hospitality heavyweight that’s now walking alone (but still carrying ITC’s perfume). With ₹839 crore revenue and ₹133 crore profit this quarter, it’s trying to prove that “de-merger” doesn’t mean “de-merit.” The stock trades at ₹222, down about 8% in 3 months, but still priced like the Taj of Dalal Street with a P/E of 62.7x and EV/EBITDA of 31x — valuations that could make even a Parsi restaurateur choke on his Irani chai.
Despite profits growing 74% YoY, dividend yield is a clean zero — because clearly, this hotel prefers to collect bills, not share them. Debt? Barely ₹80 crore. ROE? A sleepy 6.6% — the corporate equivalent of a 5-star nap.
It’s India’s third largest hotel chain, now on its own post the 2025 spin-off from ITC Ltd. The market is still figuring out whether it’s a gourmet business or just ITC’s most expensive ESG project. Buckle up — this quarter’s performance might look neat, but behind the curtains is a lot of room service math and capex drama waiting to unfold.
2. Introduction
So, ITC Hotels finally checked out from its parent company, ITC Ltd., in 2025. After decades of being the polite, eco-conscious child of a cigarette empire, it now wants to show it can breathe on its own — preferably in a well-ventilated luxury suite with LEED Platinum certification.
You might think: “But aren’t hotels booming post-COVID?” True. India’s hospitality sector is in full buffet mode — weddings are back, corporate conferences are flexing again, and everyone’s doing destination staycations like it’s a tax write-off. Indian Hotels (Taj) and Lemon Tree are popping champagne. ITC Hotels? Still adjusting the room thermostat.
The market seems confused — it loves the brand, but not the financials. A P/E above 60x for a 9.6% ROCE business? That’s like paying Oberoi prices for a Fortune Inn breakfast. Still, brand power matters. With over 140 hotels under banners like ITC Hotels, Mementos, Storii, Fortune, and WelcomHeritage, the company straddles the luxury to business segment like a true desi conglomerate: wide, complicated, and mildly confusing.
The story now is simple — can this standalone avatar grow margins faster than the buffet lines at its Sunday brunch?
3. Business Model – WTF Do They Even Do?
Let’s decode this hospitality thali:
ITC Hotels runs multiple brands across segments —
ITC Hotels / Mementos / Storii: The luxury flagships — think butlers, mahogany, and breakfast served with a “Namaste.”
Welcomhotel & Fortune: Mid-market to upscale — where India’s middle management holds conferences and complains about buffet quality.
WelcomHeritage: Boutique heritage hotels for those who like colonial guilt with good Wi-Fi.
The business mix spans owned properties, managed hotels, and franchise models — giving them flexibility (and plausible deniability when margins swing).
Their real money comes from three fronts:
Room revenue – predictable, but cyclical.
Food & beverage – a glorious margin monster, thanks to overpriced kebabs and coffee.
Management contracts – asset-light, high-margin, and what every hotel CFO dreams about at night.
The catch? ITC’s legacy means they still own a lot of their assets — which keeps capital heavy and returns light. A 10% ROCE tells you they’re earning just enough to keep the lights (and chandeliers) on.
Still, brand depth and sustainability bragging rights (solar rooftops, zero-waste kitchens) keep them on the good side of ESG-loving investors.
4. Financials Overview
Source table
Metric
Latest Qtr (Q2FY26)
YoY Qtr (Q2FY25)
Prev Qtr (Q1FY26)
YoY %
QoQ %
Revenue
₹839 Cr
₹778 Cr
₹816 Cr
7.9%
2.8%
EBITDA
₹246 Cr
₹212 Cr
₹245 Cr
16.0%
0.4%
PAT
₹133 Cr
₹77 Cr
₹134 Cr
74.3%
-0.7%
EPS (₹)
0.64
0.37
0.64
73.0%
0.0%
Commentary: ITC Hotels’ quarterly performance smells of slow simmering curry — not bad, not great. Revenue is up 8%, but that’s slower than Taj or Chalet’s buffet rush. PAT zoomed 74% YoY, but margins were helped by a mild tax dip and operational efficiencies.
EBITDA margins at 29% hold steady — decent, but below pre-pandemic highs. Think of it as good masala, but missing the garnish.
5. Valuation Discussion – Fair Value Range (Educational Only)
Let’s apply the holy trinity: P/E, EV/EBITDA, and DCF.
(a) P/E Method: Annualised EPS = ₹0.64 × 4 = ₹2.56 Industry average P/E ≈ 36x Fair Value Range (P/E × EPS) = ₹92 – ₹130 (if valued like peers). But since ITC Hotels runs a luxury brand premium, add 20–30% — Range shifts to ₹110–₹160.
(b) EV/EBITDA Method: FY25 EBITDA = ₹1,283 Cr EV/EBITDA (peer median ≈ 25x) Fair Enterprise Value = ₹32,000 – ₹38,000 Cr Subtract Net Debt ≈ ₹-750 Cr (cash positive) → Equity Value Range ≈ ₹32,000–₹39,000 Cr Per share ≈ ₹155–₹185
(c) DCF (Simplified): Assume FCFF growth 12%, WACC 10%, terminal growth 4%. Fair value range ≈ ₹160–₹190
🎯 Educational Fair Value Range: ₹150–₹185
(This fair value range is for educational purposes only and is not investment advice.)
6. What’s Cooking – News, Triggers, Drama
Demerger Done: ITC Hotels is now officially divorced from ITC Ltd. The new entity listed in 2025, giving investors a pure hospitality play minus the cigarettes and FMCG guilt.
Q2FY26 Results: ₹839 crore in revenue, ₹133 crore PAT, and a H1 consolidated PAT of ₹267 crore.
Employee Stock Appreciation Rights (ESAR): The board approved a 2% ESAR scheme — because nothing motivates like giving senior management a reason to check the stock price daily.
Capex Alert: ₹328 crore allocated for a new Visakhapatnam luxury hotel, expected by 2029. (Translation: capital blocked for five years while depreciation enjoys itself.)
Leadership Update: VP Procurement Sudhir Gupta promoted — because clearly, even procurement needs PR in hospitality.
