Detailed Rationale

Crisil Ratings has reaffirmed its ‘Crisil AAA/Stable/Crisil A1+’ rating on the proposed bank facilities of ITC Hotels Ltd (ITC Hotels).

 

ITC Ltd (ITC, rated ‘Crisil AAA/Stable/Crisil A1+’) had approved a scheme of arrangement in August 2023 (the scheme), wherein the hotel business is now demerged into ITC Hotels with effect from January 01, 2025. The shares of ITC Hotels were listed on the NSE and BSE on January 29, 2025. ITC Hotels continues to leverage the strong brand, goodwill, and institutional governance framework of the promoter company. The ratings factor strategic importance of ITC Hotels to ITC Ltd via its ~40% shareholding as promoter shareholder as well as board representation.

 

The ratings reflect the strong business risk profile of ITC Hotels, driven by its established position in the hospitality segment, with ~14000+ keys in over 90+ destinations. ITC Hotels is among India’s leading luxury hotel chains, with a diversified portfolio spanning the midscale to upper‑upscale to luxury segments. The Company (along with its subsidiaries and joint venture) has a portfolio of 150+ hotels across key metros and tier 1/2/3 cities and tourist locations under ownership/license/management/franchisee model in India, Nepal and in Sri Lanka (ITC Ratnadipa). It plans to reach over 20000+ keys and over 220+ hotels by 2030.

 

ITC Hotels demonstrated a strong performance in fiscal 2025, with consolidated revenue of ~Rs 3,560 crore and earnings before interest, taxes, depreciation and amortisation (Ebitda) margin of ~34% driven by healthy growth in room revenue as well as food and beverage revenue. ARR grew from ~Rs. 12,000 in fiscal 2024 to ~Rs. 12,500 in fiscal 2025 and is expected to grow at healthier rate in current fiscal. Occupancy has also grown from ~69% in fiscal 2024 to ~73% in fiscal 2025 and is expected to increase further in fiscal 2026. Approx. 15%* of the owned room inventory is in the stabilization phase (less than 5 years of operations) and can scale up to full potential over next few years.  With growth in demand expected to outpace supply growth in the Indian Hospitality sector, the Company is expected to sustain its healthy operating performance in fiscal 2026. The Company’s hotel ‘ITC Ratnadipa’, one of its kind mixed use project at Colombo, Sri Lanka, is scaling up well. The hotel commenced operations in April 2024, and delivery of residential apartments ‘Sapphire Residences’ commenced in Q3FY26. Ramp up of the occupancy of the hotel and residential apartment sales will remain a key monitorable. In the first nine months of fiscal 2026, the Company clocked a consolidated revenue of ~Rs 2886 crore experiencing 15.5% growth as compared to the corresponding period of fiscal 2025 with growth in Ebitda margin from 32% to 33.2%.

 

ITC Hotels has a strong financial risk profile, with net worth ~ Rs 11,000 crore as of September 2025 and a debt free balance sheet. Further expansion is planned primarily via managed hotels route, and accordingly capex outlay is expected to be relatively moderate. Net cash accruals are expected to be comfortable to support regular capital expenditure and greenfield/brownfield expansion as announced, over the next 4-5 years. Liquidity remains strong at ~Rs 2432 crore including ~ Rs 588 crore of non-current investments as of September 2025. Any significant debt funded acquisition, or expansion will be a key monitorable.

 

These strengths are partially offset by the susceptibility of revenue and profitability to cyclicality in the hospitality industry. Return ratios are seen to be improving with increasing profitability and moderate capital intensity going forward, with expansion primarily via the ‘asset-right’ model by leveraging growth through management contracts. Further, with the expected stabilisation of ITC Ratnadipa, the overall return profile is expected to improve and will be one of the monitorables.

 

*as on 31st December 2025

Analytical Approach

Crisil Ratings has considered a consolidated view of ITC Hotels for analysis, including all its subsidiaries, joint venture and associates.

 

Further, Crisil Ratings has applied its parent notch-up framework to factor in the strategic support from ITC.

 

Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation.

Key Rating Drivers - Strengths 

Strong business risk profile driven by established position in the hospitality industry

ITC Hotels’ market position in the industry is supported by the strategic business/leisure locations of its assets in metros, Tier 1/2/3 cities and key tourist hubs. It also has presence across the value chain from luxury to upper‑upscale to mid-scale to heritage segments with 7 brands (ITC Hotels, Mementos, Welcomhotel, Storii, Fortune, WelcomHeritage and including the new premium brand Epiq Collection). As on date the Company has a footprint of 150+ hotels across 90+ destinations with ~14000+ keys. The share of luxury/premium rooms in the mix of managed portfolio is also expected to improve. It also has a healthy customer mix with Retail, Contracted, MICE and wedding segments.

 

In the recent past, the group has adopted the ‘Asset-Right’ strategy, focusing on portfolio expansion through own hotels as well as via management contracts. Currently, 60% of the keys are in the managed portfolio. The target for the hotel chain is to reach over 20000+ keys across 220+ hotels by 2030 with 2/3rd of the keys being under Management contract. The Company’s new projects at Puri and Vizag are progressing well and are expected to be launched by 2027 and 2029 respectively. ITC Hotels has recently secured a ~91‑year lease from India International Convention and Exhibition Centre (IICC) Limited at Yashobhoomi, Dwarka, for the development of a premium 5‑star hotel with contemporary banqueting and signature cuisine offerings. The project, expected to be completed by 2030, will support Yashobhoomi’s evolution as a global MICE destination.

 

ITC Hotels has a robust portfolio of ~5600 owned keys in metros and tier 1/2/3 cities and key tourist hubs in addition to ~8400 keys in managed hotels across Indian Subcontinent. This has enabled scaling up of revenues to over ~Rs 3,560 crore in fiscal 2025 (~Rs 1495 crore in fiscal 2018 under Hotels segment in ITC’s consolidated financials). The operating profitability has also increased with Ebitda crossing Rs 1200 crore in fiscal 2025 as compared to Rs 320 crore in fiscal 2018 under Hotels segment in ITC’s consolidated financials. Addition of owned and managed keys, ARR growth and steadily increasing occupancy have contributed to this growth.

 

Strong financial risk profile

Strong financial risk profile is supported by net worth exceeding ~ Rs 11000 crore as of September 2025 with debt free balance sheet post demerger. Continued healthy industry prospects are expected to see stable cash generation over the medium term. Given the expansion is planned primarily via managed route, the capex commitment is expected to be relatively moderate majorly focusing on mix of greenfield/brownfield project. Net cash accruals are expected to be comfortable and will support regular capital expenditure and greenfield/brownfield expansion as announced, over the next 4-5 years. Strong liquidity of ~Rs 2432 crore including ~Rs 588 crore of non-current investments strengthens the profile further.

 

Healthy operating performance along with healthy outlook for the industry

ITC Hotels demonstrated a strong performance in fiscal 2025, with consolidated revenue of ~Rs 3,560 crore and earnings before interest, tax, depreciation and amortization (Ebitda) margin of 34% driven by healthy growth in room revenue as well as food and beverage revenue. ARR grew from ~Rs. 12,000 in fiscal 2024 to ~Rs. 12,500 in fiscal 2025 and is expected to grow at healthier rate in fiscal 2026. Occupancy has also increased from ~69% in fiscal 2024 to ~73% in fiscal 2025 and is expected to increase further in fiscal 2026. Approx. 15%* of the room inventory is in the stabilization phase (less than 5 years of operations) and can scale up to full potential over next few years.  With growth in demand expected to outpace supply growth, the Company is expected to sustain its healthy operating performance in fiscal 2026. The Company’s hotel ‘ITC Ratnadipa’, one of its kind mixed use project at Colombo, Sri Lanka, is scaling up well. The hotel commenced operations in April 2024 and delivery of residential apartments ‘Sapphire Residences’ commenced in Q3FY26. Ramp up of the occupancy of the hotel and residential apartment sales will remain a key monitorable.  In the first nine months of fiscal 2026, the Company clocked a consolidated revenue of ~Rs 2886 crore experiencing 15.5% growth as compared to the corresponding period of fiscal 2025 with growth in Ebitda margin from 32% to 33.2%.

*as on 31st December 2025

 

Strategically important to ITC

ITC Hotels remains a strategically important entity for ITC, reflected in ~40% shareholding, promoter status and board representation where strategic inputs will be provided to the Company. Over the years, ITC had built up its hotel portfolio and is demerged into a separate entity to enable the hotels business to chart its own growth path. While expansion will be primarily via managed route and accruals are expected to be comfortable compared to capex requirements. ITC will be a strong anchor shareholder in any of the growth plans / strategies that ITC Hotels seeks to execute.

Key Rating Drivers - Weaknesses 

Exposure to cyclicality in the hospitality industry

The hospitality sector is susceptible to downturns in the domestic and international economies. Growth in revenue per available room (RevPAR) in business destinations is more sensitive to macroeconomic indicators, such as nominal growth in gross domestic product. On the other hand, leisure destinations are more sensitive to non-economic factors, such as terror attacks and health-related travel warnings, as seen during the pandemic. Besides, the RevPAR of premium hotels declines more sharply during downturns in comparison with mid-sized or economy hotels, but operating cost remains high. Thus, cash flow from these properties is more susceptible to downturns.

Liquidity Superior

The liquidity profile is supported by cash and cash equivalents of ~Rs 2432 crore including ~Rs 588 crore of non-current investments. The Company is expected to continue to remain debt free and accruals are expected to be comfortable compared to capex requirements over the medium term.

Outlook Stable

ITC Hotels will continue to benefit from its strong market position, well-established brands and a healthy financial risk profile.

Rating sensitivity factors

Downward factors:

• Weakening of operating performance due to lower-than-estimated ARR and/or occupancy resulting in material compression in operating margin on a sustained basis
• Larger-than-expected, debt-funded capex/acquisition weakening the credit risk profile with gross debt to Ebitda ratio above 1.5 times on a sustained basis
• Downgrade in  rating of ITC or any change in support stance of ITC towards ITC Hotels

About the Company

ITC Ltd entered the Hotels business in 1975, with the opening of a hotel in Chennai. Over the years, it has expanded to 150+ properties across the country and has ~14000+ rooms in 90+ destinations. Brand portfolio comprises ITC Hotels, Mementos, Welcomhotel, Storii, Fortune, WelcomHeritage and the newly launched brand Epiq Collection. Erstwhile hotel business of ITC Ltd presently stands as a demerged entity as ITC Hotels Ltd with effect from January 01, 2025 and ITC Ltd holds ~40% shareholding as its promoter.

Key Financial Indicators (Consolidated)

As on / for the period ended March 31	Unit	2025	2024^
Revenue from Operations	Rs crore	3560	2224
EBITDA	Rs crore	1211	750
EBITDA margin	%	34.0%	33.7%
PAT	Rs crore	638	424
PAT margin	%	17.9%	19.1%
Adjusted debt / adjusted net worth	Times	-	-
Interest coverage	Times	N.M	N.M

^ - For the period from July 28, 2023 to March 31, 2024.

N.M – not meaningful owing to debt free status

Any other information: Not applicable