ITC Hotels 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.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 income42% above expectationscontributed 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 hotels25% of inventory still operating below 75% occupancyalong 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.Live Events(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own.
These do not represent the views of TheIndianSubcontinent)