Home / Business and Economy / Brokerage Cites Valuation Concerns, Initiates 'Sell' Rating on ITC Hotels
Brokerage Cites Valuation Concerns, Initiates 'Sell' Rating on ITC Hotels
25 Aug
Summary
- JM Financial initiates 'sell' rating on ITC Hotels despite strong fundamentals
- Valuation concerns cited despite ITC Hotels' leadership and growth potential
- Limited near-term asset commissioning a factor in the 'sell' recommendation
On August 25, 2025, shares of ITC Hotels came under selling pressure after domestic brokerage firm JM Financial initiated coverage on the stock with a 'sell' rating and a target price of Rs 215. The brokerage acknowledged ITC Hotels' position as an industry leader, with around 140 properties and 13,500 keys, and its distinct positioning in the luxury segment.
JM Financial noted that ITC Hotels has delivered a 22% CAGR in EBITDA over the past three fiscal years, aided by strong RevPAR growth. However, the brokerage cautioned that the company's growth remains restricted, with no new assets expected to be commissioned until fiscal year 2028.
Despite these strengths, JM Financial stated that at the current valuations of around 30x fiscal year 2027 earnings, the growth potential is already priced in. The brokerage also highlighted ITC Hotels' strong balance sheet and pipeline to expand its footprint to over 200 hotels and 20,000 keys by 2030, with its fee business expected to grow at a CAGR of 16% over the next three fiscal years.
Nonetheless, the brokerage reiterated its 'sell' recommendation, stating that the robust cash generation can enable ITC Hotels to accelerate growth through inorganic acquisitions, but such an outcome is already adequately priced in at the current valuations.
