ITC Hotels is at the center of attention as British American Tobacco (BAT) awaits crucial approval from the Reserve Bank of India (RBI) to proceed with the sale of its 15.29% stake in the company. This development marks a significant potential shift in the ownership structure of one of India's most diversified conglomerates.

Regulatory Hurdle

The proposed transaction, which involves BAT divesting its substantial stake in ITC Hotels, is currently pending regulatory clearance. The Reserve Bank of India's approval is a critical step in the process, highlighting the stringent regulatory environment surrounding significant foreign investment transactions in India.

Implications for ITC Hotels

ITC Hotels, known for its diverse portfolio spanning FMCG, hotels, paperboards, and agriculture, could see a notable change in its shareholder composition if the sale goes through. The 15.29% stake represents a considerable portion of the company's ownership, and its potential sale could have implications for ITC Hotels' strategic direction and governance.

Market Watch

Investors and market analysts are closely monitoring this situation, as the outcome could potentially impact ITC Hotels' stock performance and future business strategies. The sale, if approved, might also attract new institutional investors or strategic partners to the company.

Next Steps

While BAT waits for the RBI's decision, both companies are likely preparing for various scenarios. The timeline for the RBI's decision remains unclear, leaving stakeholders in anticipation of this significant corporate move.

As this story develops, further updates on the regulatory approval process and potential buyers for BAT's stake in ITC Hotels will be of keen interest to the market.

ITC Hotels Limited , one of India's leading hospitality chains, has reported a robust financial performance for the first quarter, prompting Jefferies to maintain a 'buy' rating and raise its price target.

Financial Highlights

The company's consolidated net profit surged by 54% year-on-year (YoY) to Rs 133.00 crore, showcasing significant growth in its operations. Key financial metrics include:

• Revenue from operations increased by 16% YoY, reaching Rs 816.00 crore
• EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) grew by 19%
• PAT (Profit After Tax) rose by 54%

Revenue Growth and Operational Performance

The growth was primarily driven by strong performances across various segments, including room revenues and food & beverage (F&B) services. Key highlights include:

• Room Revenues: Demonstrated strong growth across Retail, MICE (Meetings, Incentives, Conferences, and Exhibitions), and Wedding segments
• Average Daily Rate (ADR): Increased by 9% compared to the same quarter last year
• Occupancy: Improved by 275 basis points
• RevPAR (Revenue Per Available Room): Grew by 13%, outperforming the industry with a premium of 34% over competitors in the Luxury, Upper-Upscale & Upscale segments
• F&B Revenue: Recorded robust growth of 13%, driven by banqueting and outdoor catering services

Profitability and Margins

ITC Hotels' EBITDA margin stood at 32% for the quarter, expanding by 130 basis points on a comparable basis. This improvement in profitability was attributed to:

• Higher RevPARs
• Growth in F&B revenue
• Increased management fees
• Structural cost interventions
• Operating leverage

Strategic Developments and Future Plans

The company achieved significant milestones in its expansion strategy:

• Portfolio expanded to over 200 hotels, including both operational properties and those in the pipeline
• 143 operational hotels and 58 hotels in the pipeline
• Signing of 8 new hotels with approximately 700 keys in key locations during the quarter
• On track to open an average of more than one hotel per month in the next 24 months
• Ambitious goal to expand to over 20,000 keys by 2030 from the current 13,500

Sustainability Initiatives

ITC Hotels continues to lead in sustainability efforts within the hospitality industry:

• ITC Grand Bharat, Gurugram, received the LEED® ZERO Water certification
• The company now boasts the world's first 9 LEED® ZERO Water and 12 LEED® Zero Carbon certified hotels

Market Response and Analyst Outlook

• Jefferies maintained a 'buy' rating on ITC Hotels and raised its price target to Rs 270.00 from Rs 240.00
• The strong financial results were well-received by the market, with ITC Hotels' stock surging over 3% to reach a record high of Rs 246.00 on the Bombay Stock Exchange (BSE)

Conclusion

ITC Hotels' focus on expanding its portfolio, enhancing operational efficiencies, and maintaining its leadership in sustainability initiatives positions it well for continued growth in the competitive hospitality sector. The company's ability to command a significant RevPAR premium over the industry average demonstrates its strong brand value and operational excellence.

As the Indian hospitality sector continues to recover and grow, ITC Hotels appears well-positioned to capitalize on the increasing demand for premium hospitality services across various segments, supported by positive analyst outlooks and ambitious expansion plans.