1. At a Glance
India’s third-largest hotel chain—recently spun off from ITC—now wants its own corner suite on the bourses. High margins, low debt, and Marriott tie-ups galore. But can valuations justify the pillow talk?
2. Introduction with Hook
Imagine a 5-star hotel with gold-plated faucets, endless buffets, and shareholder-friendly foot massages. Now imagine it demerging and listing solo. That’s ITC Hotels Ltd, a company where linen sheets meet balance sheet dreams.
- 100+ hotels under 6 brands, including Welcomhotel & Fortune
- FY25 Net Profit: ₹638 Cr on ₹3,560 Cr in revenue
- Operating margin? 34%—they’re printing profits faster than housekeeping folds towels
3. Business Model (WTF Do They Even Do?)
ITC Hotels is in the business of premium hospitality. But this isn’t just about rooms and spas. It’s about:
- Owning & Managing Hotels under brands like ITC, Fortune, and WelcomHotel
- Franchising with Marriott through The Luxury Collection
- Target Segments: Luxury, premium, mid-market
- Strategic Capex: ₹328 Cr approved for a plush hotel in Visakhapatnam (2029 target)
Their guests get turndown service. Investors get high OPMs and zero-debt dreams.
4. Financials Overview
| Metric | FY25 |
|---|---|
| Revenue | ₹3,560 Cr |
| EBITDA (Operating Profit) | ₹1,211 Cr |
| Net Profit | ₹638 Cr |
| EBITDA Margin | 34% |
| EPS | ₹3.05 |
| Interest Cost | ₹7 Cr |
| Debt | ₹73 Cr |
| Net Cash | Positive |
Key Observations:
- Operating margins at 34% are chef’s kiss
- Debt levels are minimal post-demerger
- Huge cash outflows for capex (Visakhapatnam Hotel) = growth ambition
5. Valuation
Let’s unpack the minibar:
- P/E: ~75x TTM
- EV/EBITDA: 35x (approx)
- Book Value: ₹51.4
- Price/Book: 4.44x
- Dividend: Nada. Management reinvesting.
Fair Value Range (FV):
₹160–₹200 based on normalized 40x P/E and projected EPS growth
₹220–₹250 on long-term optimism and re-rating like Indian Hotels
It’s priced for perfection. Like ordering Dom Pérignon at a highway dhaba.
6. What’s Cooking – News, Triggers, Drama
- Biggest trigger? Recently listed post-demerger in 2025
- Capex Drama: ₹328 Cr commitment in Vizag—expect investor grilling if returns take time
- Management shakeup? Nope. No major upheavals post-split—stability reigns
- Room tariff hikes and demand surge are cyclical tailwinds
- Cyber Risk? So far, no attacks. But hotel databases are hacker magnets.
7. Balance Sheet
| Item | FY25 |
|---|---|
| Equity Capital | ₹208 Cr |
| Reserves | ₹10,484 Cr |
| Borrowings | ₹73 Cr |
| Other Liabilities | ₹1,711 Cr |
| Total Assets | ₹12,476 Cr |
| Fixed Assets | ₹8,191 Cr |
| CWIP | ₹156 Cr |
| Investments | ₹676 Cr |
Key Takeaways:
- Debt-light. Credit rating agencies are sipping champagne.
- CWIP = Growth pipeline visible
- Fixed assets heavy = high depreciation, but that’s the hotel game
8. Cash Flow – Sab Number Game Hai
| Year | CFO | CFI | CFF | Net CF |
|---|---|---|---|---|
| FY25 | ₹803 Cr | -₹2,206 Cr | ₹1,430 Cr | ₹27 Cr |
Insights:
- Operating Cash Flow strong thanks to fat margins
- Investing outflows for new hotels, upgrades
- Financing inflows from post-demerger positioning
9. Ratios – Sexy or Stressy?
| Ratio | FY25 |
|---|---|
| OPM | 34% |
| ROCE | N/A (fresh listing, under calc) |
| ROE | N/A |
| P/E | 74.9x |
| D/E | 0.01x |
| Price/Book | 4.44x |
| Dividend Payout | 0% |
Verdict:
If you’re looking for dividends, check out the continental breakfast instead. This stock is all about capital gains and margin flexing.
10. P&L Breakdown – Show Me the Money
| Year | Sales | Expenses | EBITDA | Net Profit |
|---|---|---|---|---|
| FY25 | ₹3,560 Cr | ₹2,349 Cr | ₹1,211 Cr | ₹638 Cr |
Notes:
- Growth across segments post-COVID bounce
- Margin play still strong despite inflation
- PAT Margin at ~18% in a low-leverage business = rare
11. Peer Comparison
| Company | CMP | P/E | OPM | ROCE | Market Cap |
|---|---|---|---|---|---|
| Indian Hotels | ₹744 | 63.8 | 33% | 17.2% | ₹1.06 L Cr |
| EIH (Oberoi) | ₹378 | 31.1 | 37% | 23.1% | ₹23.7 K Cr |
| Chalet Hotels | ₹898 | 138.1 | 42% | 11.3% | ₹19.6 K Cr |
| ITC Hotels | ₹228 | 74.9 | 34% | NA | ₹47.5 K Cr |
Takeaway:
Valuation wise, it’s sandwiched between Taj and Chalet. But profitability and branding = sharp edge.
12. Miscellaneous – Shareholding, Promoters
| Stakeholder | % Holding |
|---|---|
| Promoter (ITC Ltd) | 39.88% |
| FIIs | 25.37% |
| DIIs | 21.60% |
| Public | 13.11% |
- Strong anchor in ITC
- FIIs lining up at the front desk
- No government meddling
- AGM set for August 2025—keep an eye on future guidance
13. EduInvesting Verdict™
ITC Hotels is that freshly launched standalone hospitality play with the brand recall of its ITC legacy and the swagger of a Marriott-backed room service empire. Its margins are Michelin-level, its balance sheet is as clean as the lobby floor, and its pipeline is promising.
But the market has already rolled out the red carpet. Trading at ~75x earnings with no dividend and capital-heavy expansion plans? Investors better hope the suites stay booked and the stars (ratings and celebrities) keep aligning.
This is not a staycation stock. It’s a long-term compounder IF they don’t blow the capex budget on spa renovations.
Metadata
Written by EduInvesting Research | July 15, 2025
Tags: ITC Hotels, Demerger, Hospitality Stocks, Luxury Hotels, Capex, Indian Hotels Comparison, 13-point article
