ITC Hotels shares fall 5% on day 2 of trading; analysts see long-term upside
ITC Hotels slipped as much as 5% on Thursday to Rs 169.70 on the BSE on its second day of trading post-listing, after the demerged hotels arm of ITC faced selling pressure on its Dalal Street debut on Wednesday. Despite the weak start, analysts suggest investors stay put, citing strong long-term growth prospects in the hospitality sector, a favorable demand-supply outlook, and ITC Hotels’ strategic expansion plans.
The stock, which opened at Rs 188 on its debut, hit a 5% lower circuit minutes into trading on Wednesday as ITC shareholders who were not keen on holding the hotels business sought an exit. The listing price was nearly 31% lower than the special price discovery value of Rs 260 assigned in an earlier session on the Nifty and around Rs 270 on the BSE.
Despite the weak debut, brokerages suggest that any short-term weakness in ITC Hotels could present an accumulation opportunity. SBI Securities recommended retail and high-net-worth investors consider adding the stock to their long-term portfolios, given the company’s brand strength and growing market positioning.
Under the demerger scheme, ITC Ltd retained a 40% stake in ITC Hotels, while the remaining 60% was distributed to ITC shareholders in a 10:1 ratio. The total cost of acquisition for 100 shares of ITC Hotels stands at Rs 54,040, the company informed shareholders.
ITC Hotels has shown strong operational performance, with its Average Room Rate (ARR) rising from Rs 7,900 in FY19 to Rs 12,000 in FY24, reflecting a 51.9% increase (CAGR of 8.7%).
