Shares of ITC Hotels Ltd. experienced a notable decline following the release of its fourth-quarter results, yet a consensus of brokerage firms suggests a significant upside potential for the stock, with some targets hinting at over 50% growth. The hospitality major's Q4 performance was largely in line with expectations, but its average daily rate (ADR) growth of 5% year-over-year fell short of the anticipated 8%.
Q4 Performance and Geopolitical Headwinds
The company attributed a minor miss in its Q4 results to geopolitical tensions in West Asia, which negatively impacted inbound travel, particularly affecting markets in South India. Despite these challenges, analysts generally characterized the financial year 2026 as a stable period overall for ITC Hotels. Management anticipates a quarter of recovery in Q1, with strong performance expected in the second half of the current financial year.
Analyst Recommendations and Target Prices
Following the Q4 earnings report, a dozen brokerages issued target prices for ITC Hotels, ranging from Rs 190 to Rs 229, establishing a consensus target of Rs 207.87. On Monday, ITC Hotels shares were trading down 2.89% at Rs 150.98.
- ICICI Securities maintained a 'BUY' rating, revising its target to Rs 229 from Rs 250 previously. This new target implies a potential upside of 52% from the current market price. The firm projects a 9% revenue per available room (RevPAR) growth and a 21% management fees growth between FY25 and FY28, driven by new hotel openings.
- Ambit Capital also recommended a 'Buy', setting a target of Rs 225.
- Jefferies valued the stock at Rs 205.
- Axis Capital suggested a target of Rs 217.
- PhillipCapital set its target at Rs 200.
- Choice Institutional Equities, while cutting its FY27 revenue estimate by 7.8% due to weaker inbound demand and rising fuel costs, maintained a 'Buy' rating with a target of Rs 190, expecting recovery as geopolitical headwinds normalize.
- Nomura, acknowledging the in-line Q4 but lower ADR growth, adjusted its target price to Rs 195.
- Elara Securities maintained a 'Buy' rating with a target of Rs 197, highlighting the company's robust managed pipeline.
- JM Financial suggested a target of Rs 225.
Future Outlook and Expansion Strategy
ITC Hotels' management expressed confidence in a demand rebound during the latter half of the financial year. The company reported a significant expansion in FY26, with the highest-ever signings of 33 new hotels, adding over 3,300 keys to its portfolio. The managed pipeline now stands at 67 hotels, encompassing more than 6,700 keys. While growth in the owned portfolio is expected to commence from FY28, the expansion of the managed portfolio is anticipated to be the primary driver of room additions in the near term, reinforcing the company's long-term growth trajectory despite immediate market fluctuations.