Biyani notes that since the block transaction itself is being executed at a marginal 1% discount, the market reaction should be contained. “Post this, whatever small overhang existed on BAT’s supply will disappear. With peak holiday season underway and strong visibility for next year, ITC Hotels should see upside from here,” he said.
Aggressive expansion via management contracts to lift margins
Biyani highlighted that ITC Hotels’ valuation is largely in line with IHCL and may still hold room for upside. The company’s rapid room addition pipeline—dominated by asset-light management contracts—will support margin expansion and boost RoCE, he said.
On the owned-asset side, around 400 keys are expected to come onstream over the next three to four years. Recently opened flagship properties such as ITC Ratnadipa and the monetisation of branded residences at the same location will further support earnings momentum.
Valuation comfort remains
Contrary to some market reports, Biyani believes ITC Hotels is not trading at 25x EV/EBITDA on FY28 estimates. “It would be closer to 21-22 times. With strong earnings visibility and a robust industry upcycle, there is still scope for valuation expansion,” he added.
Biggest risk: A demand slowdown
Biyani flagged that the only meaningful risk for ITC Hotels—and the hospitality sector overall—is a slowdown in travel demand. However, he does not foresee this risk materialising in the near term.“The occupancy dip seen in H1 was due to travel restrictions, not a fall in organic demand. Both leisure and business travel remain intact. As long as mobility remains unrestricted, occupancy should hold up,” he said.