Jefferies Raises ITC's Target Price, Sees 19% Upside - News18
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Jefferies has raised its target price for ITC to Rs 530 from Rs 520, indicating a 19 per cent upside from current levels. The upgrade comes on the back of ITC considering an alternate structure for the hotel business. Shares of the cigarettes-to-hotels conglomerate rose over 1 per cent on Wednesday. “ITC Hotels is the second largest listed chain which has been focusing on an ‘asset-right’ strategy. We apply 18x EV/Ebitda multiple pegging at a discount to our fair value for the leader, Indian Hotels at 23x. Accordingly, we raise ITC’s target price," said Jefferies in a report dated June 27. The hotel business has contributed less than 5 per cent to ITC’s revenues and EBIT over the last decade. Meanwhile, it has accounted for over 20 per cent of ITC’s capex in the past. Investors have always been concerned as this guzzling of cash has not generated good returns. The hotel business’ RoCE (return on capital employed) has also been in single digits for most years. The hotel