ITC Hotels Shares Soar on Macquarie’s Positive Rating

ITC Hotels stock surged 6% on March 28, reaching a new all-time high of Rs 206 per share, following a bullish outlook from Macquarie, a leading global brokerage. The firm initiated coverage on ITC Hotels with an "outperform" rating and set a target price of Rs 230, indicating a potential 11% upside from current levels.

Stock Performance Since Listing

Since January 29, when ITC Hotels got demerged from ITC and listed independently, the stock has shown impressive performance, gaining 16%. Investors and analysts alike have been optimistic, with all three analysts tracking the stock issuing a "buy" recommendation.

Why Macquarie is Bullish on ITC Hotels

Macquarie’s analysts outlined several key factors contributing to their bullish stance:

• Second-largest domestic lodging company in India with a strong foothold in Tier-1 markets.

• Strategic focus on upscale properties, catering to the premium hospitality segment.

• Current valuation gap expected to shrink as the company scales up its operations.

• Strengthening of historical financial data to reflect growth potential.

• Improved market awareness and brand positioning within the hospitality sector.

• Balance sheet optimisation to support long-term profitability.

Key Financial and Strategic Insights

Macquarie also expects a significant transformation in free cash flow (FCF), driven by:

• Lower capital expenditure, reducing financial strain.

• Stabilisation of existing assets, enhancing operational efficiency.

• Asset-light expansion strategy, reducing dependency on capital-intensive models.

These factors are anticipated to boost Return on Capital Employed (ROCE) from 8% to 14%, further strengthening ITC Hotels’ financial health.

Ambit Capital Also Supports a Bullish Outlook

Macquarie is not the only brokerage firm with a positive stance on ITC Hotels. Ambit Capital has also given a "buy" rating and set a target price of Rs 230 per share, aligning with Macquarie’s assessment.

Ambit Capital cited:

• Favorable macroeconomic factors, supporting the hospitality sector’s continued growth.

• A strong upcycle in the hospitality industry, benefiting ITC Hotels.

• Luxury brand portfolio comparable to Indian Hotels Ltd, solidifying its position in the market.

Future Growth Prospects

Ambit Capital further highlighted ITC Hotels' focus on scaling up owned assets, improving operational efficiency, and pursuing an asset-light expansion model. These strategies are expected to reinforce the company’s long-term growth potential, making it an attractive bet for investors.

Conclusion

With strong support from Macquarie and Ambit Capital, ITC Hotels continues to gain investor confidence. The company’s strategic expansion plans, improved financial metrics, and focus on asset-light growth make it a promising stock in India’s booming hospitality sector. As the stock continues its upward momentum, market experts believe that ITC Hotels is well-positioned to achieve its Rs 230 per share target in the near future.

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