Financially Strong Stock to Buy Now for an Upside of 40%; Are You Holding It?

Synopsis: HSBC sees 40 percent upside in ITC Hotels, as strong domestic demand offsets Middle East conflict, supporting steady Q4 performance, revenue growth, and margin expansion.

This article outlines HSBC’s bullish view on ITC Hotels, highlighting a 40 percent upside. It discusses steady Q4 FY26 performance, robust domestic demand offsetting geopolitical challenges, healthy revenue growth, margin expansion, and the company’s strong operational fundamentals, providing investors with a comprehensive outlook on the hospitality stock. With a market capitalization of Rs 30,568 crore, ITC Hotels Ltd’s shares are trading at Rs. 147 per share, down by 0.94 percent from its previous close.

Brokerage View

HSBC on ITC hotels Maintain Buy Target Price Rs. 206, posing a 40 percent upside. The recent correction in the stock is viewed as overdone, offering an attractive entry point given steady fundamentals and improving medium-term demand outlook.

Key Rationales

• Steady Q4 Performance Amid Volatility: The fourth-quarter trading for FY26 remained broadly stable in January–February, highlighting resilience in underlying demand. Despite global market uncertainties and emerging geopolitical disruptions, operational performance stayed consistent, reflecting the sector’s ability to navigate short-term volatility without significant disruption to core business activities.
• Domestic Demand Cushions Global Weakness: A sharp 30–40 percent year-on-year decline in international inbound tourism was largely offset by robust domestic travel. Strong local demand helped maintain occupancy levels, demonstrating the importance of domestic markets in sustaining revenue and supporting overall business stability during periods of global uncertainty and reduced international footfall.
• Healthy Revenue Growth Outlook: HSBC projects fourth-quarter revenue growth of approximately 15.9 percent year-on-year, driven by continued momentum in core hospitality operations. The growth outlook reflects effective market positioning and operational execution, signaling that the company is well-placed to capitalize on both domestic travel demand and recovery in international segments.
• Margin Expansion and Manageable Geopolitical Impact: EBITDA margins are expected to expand by roughly 50 basis points year-on-year, supported by operating leverage and cost efficiencies. While Middle East conflict–related cancellations and event postponements may reduce revenues by 5–10 percent, the overall growth trajectory remains intact, indicating manageable geopolitical exposure.

About the Company

ITC Hotels is an Indian hospitality company that operates and manages hotels, with over 200 hotels. It has a franchise agreement to operate most of its hotels as part of The Luxury Collection of Marriott International. It operates hotels across 90+ destinations under brands like ITC Hotels, Mementos, Epiq Collection Storii, Welcomhotel, Fortune, and Welcome Heritage.

Financial highlights: The revenue from operations grew by 21.2 percent to Rs 1,231 crore in Q3 FY26, corresponding to the same quarter in the last financial year, and the operating margin grew from 37 percent to 38 percent YoY. Accompanied by a net profit growth of 9.7 percent to Rs 237 crore in Q3 FY26 from Rs 216 crore in Q3 FY25, resulting in EPS of Rs 1.13 per share in Q3 FY26.

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Trade Brains Technologies Private Limited or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.

The post Financially Strong Stock to Buy Now for an Upside of 40%; Are You Holding It? appeared first on Trade Brains.