After a long process, Monday (January 6) is the record date for separating ITC's hotel business. ITC had announced restructuring in July 2023. After the demerger, ITC will have a 40% stake in the hotel business. The remaining 60% stake will remain with other shareholders. ITC shareholders will get 1 share of ITC Hotels in exchange for every 10.

ITC Hotels contribute 4% of revenue to ITC. Similarly, EBIT contributes 2.5%, but the company has 14% of total assets. This is why this demerger looks attractive in terms of ITC's return on capital (RoCE). ITC Hotels has a total of 140 properties at different locations. This includes 44% company owned and 55% managed hotels. By the financial year 2024, the occupancy level of ITC Hotels was 69%. The company plans to expand to 18,000 rooms and 200 hotels by the year 2030. The company aims to increase managed hotels to 65%. Growth outlook of ITC Hotels? The hotel business has seen consistent growth after the Covid-19 pandemic. In the first half of FY 2025, ITC Hotel's revenue was ₹1,471 crore and EBITDA margin was 28%. Talking about the income mix, 52% comes from room bookings and 40% from food and beverages and 8% from other services. Talking about financials, ITC Hotels is a zero-debt company i.e. the company does not have any debt. Apart from this, the company has a cash reserve of ₹1,500 crore. Apart from this, only 20% of the inventory operates at 75% occupancy. In such a situation, there is also ample growth potential for the company. The company's capital expenditure expenditure is around 8-10% of the total income. The company is also focusing on mergers and acquisitions. Where does ITC Hotels stand compared to other hotel stocks? It is estimated that by FY 2025, the revenue of ITC Hotels can reach ₹3,680 crore. It is estimated to reach ₹4,400 crores by the financial year 2026. At the same time, EBITDA margin is also expected to reach 32-33%. In terms of industry valuation, ITC will trade at 37x FY26 EV/EBITDA, which is at a discount compared to Indian Hotels. However, it will be expensive compared to Chalet Hotels' 25x FY26 EV/EBITDA. In such a situation, the equity value of the company can be between ₹36,200 crores and ₹42,000 crores. What will be the share price of ITC Hotels? ITC's 40% stake in the hotel company has also been discounted to 35% holding company, whose value is estimated to be around ₹14,100 - ₹15,250 crores. At the same time, the value of the 60% stake that shareholders will have is around ₹22,000 - ₹23,750 crores. When ITC Hotel is listed as a separate company, its share price is expected to be ₹175 - ₹190 per share.