What should you do with your ITC Hotels shares?

The days of being mocked as the 'meme stock that never moves' have been behind ITC for some time. Now, with the eagerly awaited demerger of its asset-heavy, capex-sucking hotels unit, they will be a distant memory. In its new avatar, ITC stands to gain a lot. But we'll get to that later. The hero catching most of the spotlight is the demerged ITC Hotels, gearing up for its D-Street debut by mid-February. ITC backers will receive one share of ITC Hotels for every 10 shares they hold in the tobacco giant. The pressing questions then are: Will these investors gain from holding ITC Hotels? Will it be a worthy bet after listing? We have tried to answer below: ITC Hotels: Numbers and outlook As a standalone business, ITC Hotels has impressive numbers to show: a three-year annual revenue and EBIT growth of 52 and 126 per cent (from a loss of Rs 217 crore in FY22), respectively, propped by post-Covid recovery, during FY22-24. Its market debut further comes at a thriving time for the industry. The sector's rebound from Covid slump has been incredible, fueled by pent-up demand, increased domestic travel, and spending on leisure. According to a recent ICRA report, hotel occupancy rates touched decadal highs of 70-72 per cent in FY24 and continue to remain steady. Demand is outstripping supply, providing the industry with pricing power and enough room for future growth. ITC Hotels is working aggressively to capitalise on the uptrend. With a portfolio of over 13,000 rooms, the company is looking at another 5,000 rooms over the next four to five years. It has been consistently opening one new hotel per month and intends to keep up this pace for the next two years. The pluses include its debt-free status, which sets it apart from other peers, most of which carry debt on their books. It's also getting Rs 1,500 crore in cash from ITC to pursue capex for the short-term. How ITC Hotels fares against peers Indian Hotel