Post-Restructuring ITC: Hold or Review Investment Strategy?

Ans: Great future with the demerger news coming up, Hold it for long term.

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Ans: 485-500

Ans: some key points:
Share Distribution: ITC shareholders received one share of ITC Hotels for every ten shares they held in ITC. ITC will retain a 40% stake in ITC Hotels, while the remaining 60% will be held by shareholders.
Listing: ITC Hotels shares are expected to be listed on the NSE and BSE by mid-February 2025.
Financials: ITC Hotels had a revenue of ?3,003 crore in the financial year ended March 2024, with plans to grow its portfolio to over 200 hotels and more than 18,000 rooms by 2030.

ITC Hotels currently contributes 4% of ITC’s total revenue and 2.5% of its EBIT but accounts for 14% of the company’s total assets. This makes the demerger accretive to ITC’s return on capital employed (ROCE).

Based on industry valuation multiples ITC hotels is expected to have an equity value anything between ?36200 to ?42000 crore, translating to add a value of ?17-19 post listing. ITC Hotels has zero debt and a cash reserve of ?1,500 crore. It posted a revenue of ?1,471 crore in H1FY25 with EBITDA margins of 28%.

Analysts have set a target price range of ?150-195 per share, indicating a potential upside of 15-30% over its expected listing price.

If you're looking for a long-term investment with growth potential, ITC Hotels could be a good addition to your portfolio.