Why Are ITC Hotels Shares Falling?

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As of the recent close, ITC Hotels Ltd’s stock price is ₹199.34, down 2.93% from the previous day’s close. The stock shows mixed momentum, trading above some moving averages but below others and has seen a significant drop in delivery volume, indicating reduced investor participation. The stock has underperformed in the short term, with a 1-week return of -3.95%, while the Sensex has only dropped by -0.36%. Additionally, the stock’s performance today shows that it underperformed its sector by -6.48%. However, it’s noteworthy that the stock’s delivery volume has significantly decreased by 50.25% compared to the 5-day average, indicating falling investor participation. The stock is currently trading above its 100-day and 200-day moving averages but below its 5-day, 20-day, and 50-day moving averages, reflecting mixed momentum.          

The stock’s recent movements highlight its sensitivity to broader market sentiment and economic shifts, prompting a closer examination of the underlying causes. This article examines the primary reasons behind these movements and provides a comprehensive overview of the decline in the price of ITC Hotels shares. Despite this, the company maintains strong long-term fundamentals, as evidenced by an average Return on Equity (ROE) of 6.68% and healthy growth rates in net sales and operating profit.

Key Reasons for Decline in the Share Price of ITC Hotels

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There are several reasons the ITC Hotels share price has fallen, including the British American Tobacco (BAT) stake sale, post-demerger with Index Exclusion, uncertainty around business fundamentals, and market sentiment with supply increment. 

• British American Tobacco (BAT) stake sale: As per the initial term sheet, public shareholders Tobacco Manufacturers (India), Myddleton Investment Company, and Rothmans International Enterprises were looking to sell up to 14.58 crore shares at ₹205.65, accounting for 7% stake, for ₹2,998.40 crores, or $333 million, at an exchange rate of 89.98 per dollar. This large supply of shares on the market has led to significant selling pressure, pushing the price down. 
• Post-demerger with Index Exclusion: At the start of 2025, ITC Hotels underwent a demerger and was listed as a separate entity. The decline in ITC’s share price after the demerger reflects investor concerns about the immediate value-add. In contrast, the demerger was expected to unlock potential for ITC Hotels; however, the holding company’s discount and regulatory uncertainties may have tempered the market scenario. 
• Uncertainty around Business Fundamentals: A major portion of the hotel chain’s recent assets are greenfield projects, many of which reportedly have low occupancy, which lowers the return on capital employed (ROCE) in the near term. ITC Hotel’s fundamentals are seen as weak and not particularly strong for growth and development, which negatively impacts the share price of ITC Hotels. 
• Market Sentiment and Supply Increment: The demerger primarily led to a price-discovery process, with the stock listing at a lower price than some initial estimates, which suggests a defensive investor approach and a potential “holding company discount,” and also affects investor confidence. 

ITC Hotels: An Overview

ITC Hotels is an Indian hospitality company that operates and manages hotels. It has over 100 hotels and is India’s third-largest hotel chain. It has a franchise agreement to operate most of its hotels as part of Marriott International’s The Luxury Collection. On 1st January 2025, the ITC Hotels demerger officially came into effect. Shareholders of ITC were allotted one share of ITC Hotels for every 10 shares of the parent company. The total revenue of ITC Hotels is approximately ₹31.03 billion, with total income of ₹7.65 billion and total assets of ₹87.65 billion. In 1984, ITC Ltd bought the entire equity capital from VST. In 1985, the government awarded the hotel that would later become the ITC Gardenia a five-star rating. In an effort to unlock value and focus on core competencies, ITC Limited decided to demerge its hotel business into a separate entity. The current footprint encompasses over 140 hotels across over 90 destinations, comprising about 13,000 keys. 

ITC Hotels: Share Price Performance 

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In the broader market context, ITC Hotel’s share price has declined by 6.03% over the past month, while ITC Hotels has decreased by 3.21% in the same period. This underperformance may reflect broader market trends and investor sentiment that are negatively impacting ITC Hotels more than the overall market. The consolidated net profit was recorded at 634.57 crores, with earnings per share (EPS) of 3.05. The operating profit margin was 34.34%, and the profit after tax margin was 18.08%. On the balance sheet, shareholders’ funds increased to 10,692.17 crores from 8,497.85 crores in the previous year. According to some analysts, ITC Hotels’ share price target is approximately 264.67. Cash flow from operating activities improved to 803.00 crores, while cash flow from investing activities showed a larger outflow of ₹2,205.00 crores. 

How have ITC Hotels’ Shares Performed Recently?

As of 9th December 2025, the ITC Hotels share price is ₹199.3. The stock opened at ₹204.8 and had closed at ₹205.4 the previous day. During today’s trading session, ITC Hotels’ share price moved between ₹194.00 and ₹205.39, with an average cost for the day of ₹199.69. Over the last 52 weeks, the stock has traded between ₹155.10 and ₹261.62. In terms of performance, the ITC Hotels share price has declined by 8.7% over the past six months and has increased by 39.17% over the last year. According to some analysts, ITC Hotels’ share price target is approximately 264.67.

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Is ITC Hotels a Good Stock to Buy?

ITC Hotels’ share has been under pressure lately, so investors must review its past performance before investing in these stocks. As per the quarterly results of ITC Hotels, consolidated revenues decreased by 5.2%, and expenses increased by 1.8% QoQ and YoY, resulting in a 27.2% decrease in net profit. The earnings per share (EPS) of the ITC Hotels stood at 0.6 during Q1FY26. According to some analysts, ITC Hotels’ share price target is approximately 264.67. Some analysts offering a 1-year price forecast have a maximum estimate of ₹3,303.00 and a minimum estimate of ₹2,202.00. The ITC Hotels shares have a 28.50 gain from the 52-week low. In summary, as per some analysts, buying ITC Hotels shares can be a good opportunity for long-term growth and stability in the near future.  

ITC Hotels: Share Price Target   

ITC Hotels’ share price target is ₹264.67. The consensus estimate represents an upside of 32.72% from the last price of ₹199.42. Investment in ITC Hotels. View eight reports from two analysts offering long-term price targets of ITC Hotels. The stock has exhibited a mixed trend over the past few years, with recent performance characterised by a negative outlook. In 2025, the stock is down 6.78%, following a 12.23% decline in 2024. This also shows the downturn in the ITC Hotels share price in a negative light, overlooking past performance in some previous years.            

ITC Hotels: Future Outlook

Despite its recent share price decline, ITC Hotels’ future outlook is a complex balance of its inherent strengths, strategic growth initiatives, and various external and internal risks. 

• Moderate Growth: Analysts expect ITC Hotels to grow its earnings at a rate of 3.56% per annum and revenue at a rate of 6.68% per annum over the next few years. This pace is relatively modest and signals a clear shift from its earlier high-growth phase. For a company that once delivered sharp gains, such forecasts suggest that future returns may be surplused. 
• Strategic Expansion: Management aims for digital expansion (a unified OTA portal by FY26) and significant growth in other segments (catering: 9-10%, tourism: 15% for FY26). ITC Hotels is poised to benefit from improvements made by the Indian Hospitality industry.
• Persistent Challenges: ITC Hotels’ shares are declining due to market dynamics and overvaluation. Key challenges include its heavy reliance on government policies, growing digital competition in the travel industry, regulatory uncertainties impacting revenue, and several other factors.  
•  Strong Financial Performance: ITC Hotels has shown consistent financial growth, with positive trends in sales and net profit over the recent years. Its Q4 FY25 results further demonstrate robust performance, with a record consolidated PAT and a recommended dividend.

ITC Hotels: Analysts’ Rating

• The average 12-month price target is ₹264.78, and the consensus rating is Hold (mix of Buy, Hold, & Sell).
• The analyst’s target range is observed between a high of ₹234.00 and a low of ₹180.78. 
• According to some analysts, some concerns remain with a ‘Reduce’ call of ₹180.78.
• The analyst’s sentiment is mixed; there have been recent bullish calls (ICICI, JM), but also cautious ones (Motilal Oswal, Nuvama). 

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What is the Right Time to Buy ITC Hotels Shares?

 According to analysts, the ITC Hotels share price is determined by market factors. The share price has decreased due to internal company factors, as discussed above. Therefore, investors must review all relevant factors before investing in ITC Hotels. There are some factors to consider before investing in ITC Hotels Company shares.

• Strong Fundamentals: Investors should review the ITC Hotels Company’s fundamentals before making an investment. If a company has strong fundamentals, high profitability, and effective management, then investors should consider investing in it.    
• Financing Partnerships: Financing partnerships bridge the gap between customers and financial institutions, facilitating the distribution of a wide range of products and generating positive sales revenue for many consumers.   
• Growth in the Hospitality Sector: The company is well-positioned in the hospitality sector to deliver benefits to ITC Hotels. This dominant sector increases demand and prices for the ITC Hotels Company.
• Highly Volatile: Prices are highly volatile, so price changes have a significant impact on ITC Hotels Company’s stock prices. Investors must review the market structure before investing in ITC Hotels shares.  

Conclusion

ITC plans to expand its hotel portfolio from 140 to over 200 properties, focusing on an asset-light model that relies on management contracts and franchises. The newly formed ITC Hotels will independently pursue international expansion, targeting neighbouring countries and West Asia. ITC Hotels’ share price target is ₹264.67. The consensus estimate represents an upside of 32.72% from the last price of ₹199.42. Investment in ITC Hotels. View eight reports from two analysts offering long-term price targets of ITC Hotels. The stock has exhibited a mixed trend over the past few years, with recent performance characterised by a negative outlook. 

FAQs 

What are the key reasons for investing in the ITC Hotels Shares?

Ans. There are several reasons the ITC Hotels share price has fallen, including the British American Tobacco (BAT) stake sale, post-demerger with Index Exclusion, uncertainty around business fundamentals, and market sentiment with supply increment. As per the initial term sheet, public shareholders Tobacco Manufacturers (India), Myddleton Investment Company, and Rothmans International Enterprises were looking to sell up to 14.58 crore shares at ₹205.65, accounting for 7% stake, for ₹2,998.40 crores, or $333 million, at an exchange rate of 89.98 per dollar.

What are the factors that affect the ITC Hotels share price?

Ans. According to analysts, the ITC Hotels share price is determined by market factors. The share price has decreased due to internal company factors, as discussed above. Therefore, investors must review all relevant factors before investing in ITC Hotels. There are some factors to consider before investing in ITC Hotels Company shares. Prices are highly volatile, so price changes have a significant impact on ITC Hotels Company’s stock prices. Investors must review the market structure before investing in ITC Hotels shares.  

What are the future predictions by analysts regarding ITC Hotels shares?

Ans. Analysts expect ITC Hotels to grow its earnings at a rate of 3.56% per annum and revenue at a rate of 6.68% per annum over the next few years. This pace is relatively modest and signals a clear shift from its earlier high-growth phase. For a company that once delivered sharp gains, such forecasts suggest that future returns may be surplused.  Management aims for digital expansion (a unified OTA portal by FY26) and significant growth in other segments (catering: 9-10%, tourism: 15% for FY26). ITC Hotels is poised to benefit from improvements made by the Indian Hospitality industry.

What is the share price target of ITC Hotels?

Ans. ITC Hotels’ share price target is ₹264.67. The consensus estimate represents an upside of 32.72% from the last price of ₹199.42. Investment in ITC Hotels. View eight reports from two analysts offering long-term price targets of ITC Hotels. The stock has exhibited a mixed trend over the past few years, with recent performance characterised by a negative outlook. In 2025, the stock is down 6.78%, following a 12.23% decline in 2024. 

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