Inline quarter; owned pipeline strengthens
ITC Hotels (ITCH) reported a steady performance, driven by 9% growth in ARR and 290bps expansion in occupancy, leading to RevPAR growth of 13% YoY at the consolidated portfolio level. ITC Ratnadipa (Sri Lanka) maintained its market leadership position in terms of RevPAR and was EBITDA positive on a 9MFY26 basis, as it benefited from the highest-ever foreign tourist arrivals in Sri Lanka. Revenue for 3QFY26 was INR 12.3bn (+21% YoY; +47% QoQ), which includes INR 815mn revenue from the residential business, as the company commenced delivery of Sapphire Residences. On a LfL basis, top line grew by 13% YoY (in line) while EBITDA increased 16% YoY. ITCH has secured a 0.9 acre leasehold land at Yashobhumi, Dwarka, New Delhi, for a luxury five-star hotel, thus strengthening its owned portfolio pipeline, which now has four upcoming assets. This land has been allotted to the company on a 91-year lease for a one-time lease premium of INR 3.3bn. Aligned with its asset-light strategy, the company commissioned six new hotels across India, taking the operational portfolio beyond 150 hotels with c.14,000 keys. We expect ITCH to report 11%/14% CAGR in revenue and EBITDA over FY25-28E and maintain BUY with a Mar’27 TP of INR 235.
Steady operating performance: Room revenue grew by 12% during the quarter, led by healthy demand from the corporate, wedding, and MICE segments. ADR for the quarter grew by 9% and occupancy rose by 290bps to 75%, resulting in RevPAR growing by 13% YoY at the consolidated portfolio level. F&B revenue went up by 8% YoY driven by banquet demand and healthy traction from weddings and corporate events. The domestic owned portfolio recorded 12%/11% YoY growth in RevPAR in 3Q/9MFY26 respectively. ITC Ratnadipa maintained its market leadership position in terms of RevPAR and was EBITDA positive on a 9MFY26 basis. Sri Lanka’s economy is witnessing broad-based recovery across sectors and recorded healthy GDP growth. Tourism activity also showed strong momentum, with foreign tourist arrivals reaching 2.4mn in CY25 (highest ever).
In-line revenue: Revenue for 3QFY26 came in at INR 12.3bn (+21% YoY; +47% QoQ) including INR 815mn revenue coming from the residential business as the company commenced delivery of Sapphire Residences. EBITDA for the quarter was INR 4.7bn (+23% YoY; +90% QoQ). On a LfL basis, top line grew by 13% YoY (in line) and EBITDA rose by 16% YoY. On a standalone basis, revenue was INR 10.5bn (+12% YoY; +38% QoQ), while EBITDA was INR 4.1bn (+12% YoY; +77% QoQ) with margin flat YoY at 39%.
Healthy pipeline across owned and managed portfolio: ITCH currently has a portfolio of 213 hotels – 152 operational and 61 in the pipeline. Aligned with its asset-light strategy, ITCH continues to partner with asset owners to expand its footprint across Tier-II and Tier-III cities. In 3QFY26, it opened new hotels in Bodh Gaya, Rishikesh, Siliguri, Sirmaur, Dungarpur and Jaipur. India International Convention and Exhibition Centre Limited (IICC Ltd) has allotted a 0.9 acre land parcel at Yashobhumi, Dwarka, New Delhi, to the company on a 91-year lease for the development of a premium five-star hotel, with construction expected to be completed by CY30. While the company has been actively strengthening the managed pipeline, this asset improves the visibility of its owned portfolio, which now has four upcoming assets.
Maintain BUY with a Mar’27 TP of INR 235: Going forward, we expect ITCH to report 11%/14% CAGR in revenue and EBITDA over FY25-28E aided by c.7% growth in ADR and ramp-up of the Sri Lanka asset. We value the stock at 25x EV/EBITDA on Mar’28E and maintain BUY with a TP of INR 235.
