ITC Hotels Q2 FY26: Solid Gains in Hospitality, but Growth Base Still Moderate
ITC Hotels’ Q2 FY26 numbers show healthy revenue growth, sharp rise in profit after tax and stronger hotel-level earnings. The results are backed by operational improvement across properties and tighter cost control, but the company still operates off a modest base after the demerger last year.
*Headline numbers*
* Revenue from operations (consolidated): ₹839.48 crore in Q2 FY26 versus ₹777.95 crore in Q2 FY25: +7.9% YoY
* Total income: ₹884.89 crore in Q2 FY26
* Profit before tax: ₹188.69 crore in Q2 FY26 versus ₹113.60 crore a year ago
* Profit after tax (consolidated): ₹132.77 crore in Q2 FY26 versus ₹76.17 crore in Q2 FY25: +~74% YoY.
* Earnings per share (basic, consolidated, not annualised): ₹0.64 in Q2 FY26 versus ₹0.37 in Q2 FY25.
*Hospitality continues its steady climb*
* Hotels segment remains the core engine: Hotels revenue was ₹822.80 crore in the quarter versus ₹763.48 crore a year ago, up ~7.8% YoY. This accounts for the vast majority of company revenue, confirming that room, F&B and meetings/ events recovery is continuing.
* Other smaller lines: “Others” contributed ~₹10.68 crore, real estate remained nil for the quarter as projects are still at development stage. Total consolidated gross revenue from sale of products and services stood at ₹832.04 crore.
*Profitability: margins, segment profits and cost control*
* Hotels segment result (segment-level profit): ₹140.64 crore in Q2 FY26 versus ₹105.14 crore in Q2 FY25: an increase of roughly 34% YoY. Hotel operations are not just seeing higher revenue but also better operating leverage.
* Consolidated profit before tax of ₹188.69 crore reflects positive contributions from segment results and a favourable unallocated income line. The company reported an “other un-allocable income” credit that improved PBT.
* Expense structure: For the quarter, notable line items included consumption of food, beverage etc.: ₹86.49 crore, employee benefits: ₹186.61 crore, depreciation and amortisation: ₹104.08 crore and other expenses: ₹320.63 crore. Total consolidated expenses were ₹699.72 crore for the period.
*Balance sheet position: large asset base with low debt stress*
* Hotels segment assets: ₹8,646.46 crore as of 30 September 2025. Real estate assets stood at ₹1,414.45 crore reflecting ongoing development. Total consolidated assets were ₹12,821.90 crore. These numbers show sizeable capital employed in the business.
* Total consolidated liabilities were ₹1,745.43 crore. Finance costs in the quarter were modest at ₹1.91 crore, indicating low interest burden relative to the asset base.
*Half-year performance*
* H1 FY26 revenue and profit trends are consistent with the quarter: 6-month revenue from operations was ₹1,655.02 crore and PAT for six months was higher YoY, reflecting sustained momentum. The company’s operations are benefiting from improving demand and operational discipline.
* The strong YoY percentage jump in PAT (≈74%) is partly due to the structural changes after the demerger.
*Key insights for investors*
1. Margin recovery is real but fragile: Hotels segment profit has grown faster than revenue, showing operating leverage. The company must keep a lid on employee and “other” operating expenses to sustain margin gains.
2. Asset intensity remains high: With hotels assets ~₹8,646 crore and total assets ~₹12,822 crore, capital efficiency and ROIC will be key to monitor in coming quarters. Real estate assets will be important to monitor as they convert to revenue in future periods.
3. Low finance cost gives optionality: Interest costs are low relative to EBITDA potential, so management has room to invest selectively in product enhancement or debt-funded growth without immediate strain.
*Conclusion*
ITC Hotels’ Q2 FY26 results show a clearly strong performance: steady revenue growth, a sharp increase in PAT and improved profitability in the core hotels segment. The encouraging sign is that demand is growing not only in room bookings but also in higher-margin areas such as food and beverage and events, supported by better cost control. However, the company still operates with a large asset base, and its margins can be affected by changes in labour and input costs. If the company continues to manage costs well and maintains a better mix of high-margin revenues, it can convert this momentum into consistently stronger returns and long-term value for shareholders.
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