ITCHOTELS - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 3.6
| Stock Code | ITCHOTELS | Market Cap | 38,733 Cr. | Current Price | 186 ₹ | High / Low | 262 ₹ |
| Stock P/E | 45.5 | Book Value | 54.6 ₹ | Dividend Yield | 0.00 % | ROCE | 9.74 % |
| ROE | 7.04 % | Face Value | 1.00 ₹ | DMA 50 | 194 ₹ | DMA 200 | 205 ₹ |
| Chg in FII Hold | -9.39 % | Chg in DII Hold | 0.92 % | PAT Qtr | 286 Cr. | PAT Prev Qtr | 152 Cr. |
| RSI | 46.8 | MACD | -3.48 | Volume | 15,52,704 | Avg Vol 1Wk | 35,85,948 |
| Low price | 158 ₹ | High price | 262 ₹ | Debt to equity | 0.01 | 52w Index | 26.8 % |
| Qtr Profit Var | 25.4 % | EPS | 3.90 ₹ | Industry PE | 31.0 |
📊 ITC Hotels shows moderate potential for long-term investment. ROCE at 9.74% and ROE at 7.04% are modest, reflecting average efficiency. The debt-to-equity ratio of 0.01 highlights a virtually debt-free balance sheet, which is a strong positive. However, the P/E of 45.5 is significantly higher than the industry average of 31.0, suggesting overvaluation. Current price (186 ₹) is below DMA 50 (194 ₹) and DMA 200 (205 ₹), indicating weak momentum. Dividend yield is 0%, offering no income support. Quarterly PAT growth (25.4%) is encouraging, but FII holdings declined sharply (-9.39%), raising caution.
💡 Ideal Entry Zone: 170 ₹ – 185 ₹ (aligned with support levels and valuation comfort).
📈 Exit / Holding Strategy: If already holding, maintain for 2–3 years provided ROE improves above 10% and earnings growth sustains. Consider partial profit booking near 220–240 ₹ resistance. Long-term holding should be cautious given high P/E and lack of dividend yield.
Positive
- 📌 Debt-to-equity ratio of 0.01 shows strong balance sheet stability.
- 📌 Quarterly PAT growth of 25.4% (152 Cr. to 286 Cr.).
- 📌 EPS at 3.90 ₹ supports earnings visibility.
- 📌 DII holdings increased (+0.92%), showing domestic confidence.
Limitation
- ⚠️ ROE at 7.04% and ROCE at 9.74% are modest.
- ⚠️ P/E of 45.5 vs industry PE of 31.0 highlights overvaluation.
- ⚠️ Dividend yield at 0% offers no income support.
- ⚠️ Current price below DMA 50 and DMA 200 shows weak momentum.
Company Negative News
- ❌ Significant decline in FII holdings (-9.39%).
- ❌ Valuation multiples remain stretched compared to peers.
Company Positive News
- ✅ PAT improved from 152 Cr. to 286 Cr. in the latest quarter.
- ✅ DII holdings increased, reflecting domestic investor support.
- ✅ Debt-free structure strengthens financial stability.
Industry
- 🏨 Industry PE at 31.0 vs stock PE 45.5 highlights premium valuation.
- 🏨 Hospitality sector growth supported by rising tourism and premium hotel demand.
Conclusion
🔎 ITC Hotels offers a debt-free balance sheet and improving profitability, but high valuations and weak ROE/ROCE limit long-term attractiveness. Best suited for cautious investors who can accumulate near 170–185 ₹ and hold for 2–3 years, while monitoring profitability improvements and valuation normalization. Profit booking near 220–240 ₹ resistance is advisable.