Jefferies raises ITC Hotels target to Rs 270 post Q1 results; will the stock rally further from here?

Global brokerage Jefferies has raised its target price on ITC Hotels to Rs 270, up from Rs 240 earlier. This hints at an upside potential of around 13 per cent from current levels. Jefferies retained its 'buy' rating on this stock. 

ITC Hotels Q1 results

ITC Hotels delivered a 53.4 per cent jump in Q1 profit to Rs 133.71 crore, driven by a 16 per cent year-on-year increase in topline and a 19 per cent growth in EBITDA. Jefferies highlighted that revenue per available room (RevPAR) surged 13 per cent, with average room rates rising 9 per cent. Other income, particularly treasury gains from Rs 1,900 crore in cash reserves, also boosted profitability.

Sri Lanka project gains scale

The brokerage particularly focused on the scale-up of ITC Ratnadipa, its 352-key luxury hotel in Colombo. The hotel, launched in April 2024, clocked a 40 per cent YoY jump in revenue and maintained a 50 per cent occupancy rate even during a seasonally weaker quarter. Meanwhile, sales from the adjacent Sapphire Residences project (132 luxury apartments) are expected to start contributing to revenue and EBITDA from H2 FY26.

Expansion pipeline, asset-light strategy key growth levers

With a target of 20,000+ keys by 2030, ITC Hotels continues to aggressively expand. During Q1 FY26, the company signed eight new hotels, bringing its total signings to 55 in the past 24 months. It now boasts a 200+ hotel portfolio with a pipeline of 58 properties. The company’s Rs 400 crore capex plan for FY26, in line with management guidance of 8–10 per cent of sales, also reinforces its growth ambitions.

Jefferies highlighted ITC Hotels' strong No. 2 position in the listed hospitality space and noted that the shift towards an asset-light model and execution of recent greenfield projects are likely to drive earnings re-rating in the near term.

Investor takeaway: Is it time to buy ITC Hotels stock?

From the investor's perspective, Jefferies' upgrade shows faith in the standalone growth story of ITC Hotels after the demerger. The brokerage feels the cyclical upturn in the hospitality industry and the company's balance sheet discipline and geographic diversification make the company a strong long-term bet.

For investors who want to ride India's high-end hospitality wave, ITC Hotels provides an exposure to a de-leveraged hospitality business. With a well-defined strategy, solid balance sheet, and tailwinds from increasing travel demand, the stock could continue to attract institutional buying in the next few quarters.