ITC Hotels shares rise for third day; Elara Securities reaffirms ‘Accumulate' rating
continued its upward momentum for the third consecutive day on Friday, rising 2.36% to Rs 247.66 in intraday trade. The rally comes on the back of a robust June quarter performance, prompting Elara Securities to reaffirm its 'Accumulate' rating on the stock.
The company posted a strong 54% year-on-year (YoY) growth in net profit for Q1FY26, with profit attributable to shareholders rising to Rs 133 crore from Rs 87 crore a year earlier. Revenue from operations also increased 15.5% to Rs 816 crore, compared to Rs 706 crore in Q1FY25.
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In its research note, Elara Securities said,
'ITC Hotels reported a better-than-expected Q1, driven by a 300bps increase in occupancy. The ramp-up in occupancy at ITC Ratnadipa led to stronger operating leverage. Higher other income—42% above expectations—contributed to the PAT beat. ARR grew 8% YoY to Rs 10,822, resulting in a 13% rise in RevPAR.'
Elara added, 'ITCHOTEL enjoys a 34% RevPAR premium over the industry. At ITC Ratnadipa, occupancy is ramping up well, delivering an 80% RevPAR growth in Sri Lankan Rupee terms. With a continued scale-up at Ratnadipa (operations commenced in April 2024) and other recently launched hotels—25% of inventory still operating below 75% occupancy—along with rising ARR, we expect double-digit RevPAR growth to continue. We raise our SoTP-based target price to Rs 256 from Rs 225, valuing the hotel business at 28x Q1FY28E EV/EBITDA and Sapphire Residences at 1x NAV. Maintain Accumulate.'
On the technical front, the daily Relative Strength Index (RSI-14) for the stock stands at 73.5. An RSI above 70 typically indicates overbought conditions, suggesting the stock has witnessed a strong rally and may be due for near-term consolidation or profit booking.
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