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HomeMarket NewsITC Hotels shares get another 'buy' rating post listing with Macquarie projecting 18% upside
The valuation dislocation is expected to be resolved through the growth of new assets, improved historical data, increased awareness, and balance sheet optionality.
By Meghna Sen March 28, 2025, 9:40:44 AM IST (Published)
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Shares of ITC Hotels Ltd. surged over 2% in Friday's trading session after global brokerage firm Macquarie initiated coverage on the stock.
The initiation comes with an 'Outperform' recommendation and a price target of ₹230 per share, which implies a potential upside of 18% from Thursday's closing levels.
Macquarie wrote in its note that ITC Hotels is India's second-largest domestic lodging company, with a strong presence in Tier-1 markets and a focus on upscale properties.
The brokerage said that valuation dislocation should be resolved through the growth of new assets, improved historical data, increased awareness, and balance sheet optionality.
It expects an inflection in free cash flow (FCF) driven by lower capital expenditures, stabilizing assets, and asset-light expansion, which could boost the company's return on capital employed (ROCE) from 8% to 14%.
Another brokerage firm Ambit Capital also has a 'Buy' rating and a price target of ₹230 on the counter. It said that macro factors remained favourable and the ongoing upcycle is likely to sustain.
Ambit Capital said that ITC Hotels offers luxury brand with portfolio of brands, akin to Indian Hotels Ltd, citing its iconic F&B offerings. Also, it cited ramp-up of owned assets, operational efficiency and asset-light focus to suggest a Buy on the stock.
According to the brokerage, Hotels is an investment heavy industry. It is a direct beneficiary of government-led infra and tourism initiatives, including FTA recovery. Recent budget demonstrates GoI's focus, it said.
Following the demerger announcement and subsequent spin-off, ITC Hotels Ltd. shares were listed on the bourses on January 29.
All three analysts tracking the stock have a 'Buy' rating.
Shares of ITC Hotels Ltd. are currently trading 0.75% higher at ₹196.06.
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