ITC Hotels Q1 Review: Analysts Bullish On Expansion Roadmap, Robust Operational Metrics

ITC Hotels has kicked off FY26 with a robust performance, drawing bullish outlook from leading brokerages for its operational strength, strategic expansion, and promising outlook.

The company, which recently demerged from ITC Ltd., reported a 53.8% year-on-year jump in net profit to Rs 133 crore and a 15.5% rise in revenue to Rs 816 crore for the quarter ended June 2025.

Both Macquarie and Jefferies noted the hotel segment's outperformance, driven by strong Revenue Per Available Room or RevPAR growth, occupancy gains, and the scaling of its Sri Lanka project, ITC Ratnadipa.

Macquarie Equity Research maintained its “Outperform” rating on ITC Hotels, raising its target price by 8% to Rs 270. The brokerage highlighted the hotel segment’s solid revenue and Ebitda growth of 16% and 19%, respectively, attributing it to improvements in ARR, occupancy, and cost controls.

“ITC Ratnadipa RevPAR almost doubled from launch in 1QFY26 with stable occupancy,” Macquarie noted, adding that the property continues to scale well despite seasonal challenges.

While the overall results beat consensus estimates, Macquarie pointed out a slight miss versus its own projections due to deferred real estate revenue recognition.

“Recovery has been strong since exogenous events slowed the maturation of younger properties,” the report stated. “Management used pricing to drive occupancy in this quarter.”

Macquarie also acknowledged the company’s aggressive expansion plans, “We are now incorporating management's target of 20,000 rooms by FY30 in our forecast, versus previously just incorporating the current operational and pipeline rooms (18,000).”

The brokerage revised its FY26 revenue estimates downward due to deferred real estate recognition but increased FY27 and FY28 projections, citing long-term growth potential.

Jefferies echoed the optimism, maintaining a “Buy” rating and revising its price target to Rs 270. The firm highlighted a “healthy beat” across revenue, Ebitda, and PAT, with YoY growth of 16%, 19%, and 54%, respectively.

“ITCH delivered strong RevPAR growth of 13% despite a soft May when the hospitality industry was affected by macro events,” Jefferies wrote. “This was led by 9% ARR growth and a 275bp YoY occupancy expansion to 73%.”

The brokerage also emphasised the strategic importance of ITC Ratnadipa, the company’s greenfield hotel in Sri Lanka:

“Revenue for ITC Ratnadipa shot up 40% YoY on the back of increased occupancy to 50%,” Jefferies noted. “The adjacent Sapphire Residences project is expected to contribute to revenue from 2HFY26.”

Jefferies was also bullish on ITC Hotels’ asset-light expansion model and its ambitious goal of reaching 20,000 keys by 2030, “The company completed 8 signings during Q1, taking total signings to 55 hotels in the last 24 months,” the report stated.

The brokerage expects Ebitda and PAT to grow at a CAGR of 15% and 23% over FY25–FY28, driven by operational efficiency and scale.