Last Updated on January 27, 2025 by IPO Manthan Team
ITC Hotels is all set to make its debut on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) on January 29, 2025. This follows the much-anticipated demerger from ITC Limited, which officially came into effect on January 1, 2025. The move has been designed to unlock value for shareholders and create a focused, standalone entity in the hospitality space. The ITC hotels listing marks a significant milestone for the group and the industry.
Under the demerger scheme, ITC shareholders will receive one share of ITC Hotels for every ten shares they hold in ITC. This structure ensures that around 60% of ITC Hotels is owned directly by ITC’s existing shareholders, while ITC retains a 40% stake in the company. This split is expected to provide ITC Hotels with the flexibility to operate independently while retaining the financial strength of ITC Limited. Analysts believe this listing could be transformative for ITC Hotels, allowing it to attract dedicated investors and pursue focused growth strategies.
The listing price for ITC Hotels is projected to range between ₹100 and ₹300 per share, with many estimates hovering around ₹145 to ₹200. Some conservative estimates suggest the price could be closer to ₹130, but even at this level, the valuation aligns with industry benchmarks. Peers such as Indian Hotels and EIH Ltd trade at high earnings multiples, and ITC Hotels is expected to position itself competitively within this segment. This ITC hotels listing has generated substantial interest among investors due to the company’s robust expansion plans and the broader appeal of the luxury hospitality sector.
ITC Hotels plans to expand aggressively, targeting over 200 hotels in the coming years. Backed by a strong balance sheet and significant cash reserves, the company is poised to implement an asset-light strategy, focusing on management contracts rather than owning properties. This approach is expected to yield sustainable growth and higher returns for shareholders. As an independent entity, ITC Hotels will have greater operational freedom to explore strategic opportunities, including partnerships and new market entries, without being tied to ITC Limited’s tobacco-heavy profile.
The timing of the ITC hotels listing is particularly notable, as it coincides with the upcoming Union Budget on February 1, 2025. This has added to the excitement among investors, who are closely watching both the hospitality sector and broader market developments. Many analysts believe the listing will not only unlock value for ITC shareholders but also highlight the growth potential of the Indian hospitality industry.
For ITC Limited, the demerger allows better capital allocation. The hotel business accounted for just 3% of its earnings before interest and taxes, despite utilizing 18% of the overall capital employed. By separating the two entities, ITC Limited can now focus on its higher-margin businesses like FMCG and cigarettes, which have been delivering strong growth. This strategic shift is expected to improve operational efficiency and increase dividend payouts for ITC shareholders in the medium term.
Shareholders also stand to gain from the ITC hotels listing by gaining direct exposure to the hospitality sector. The standalone entity is well-positioned to pursue its growth strategies, raise funds independently, and operate with greater focus. By adopting a more agile and market-driven approach, ITC Hotels aims to carve out a strong position in the competitive luxury hotel market.
This listing is also being viewed as an opportunity for ITC Hotels to align its valuation metrics with its peers. Even at the lower end of the expected price range, ITC Hotels would remain attractive to investors seeking long-term growth in the hospitality sector. Many analysts have highlighted the company’s strong brand and operational synergies with ITC Limited, which give it an edge in this market.
Overall, the ITC hotels listing represents a significant step forward for both ITC Limited and ITC Hotels. As shareholders eagerly await the debut on January 29, 2025, the listing is expected to redefine the group’s presence in the hospitality sector and unlock new growth opportunities. Investors and market watchers alike are optimistic about the potential of this independent journey for ITC Hotels.