Why Did ITC Hotels Experience a 48% Drop in Profit?
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Synopsis
In a dramatic turn of events, ITC Hotels reported a staggering 48% decline in net profit for Q1 FY26. Despite this setback, the company saw a year-on-year profit increase of 54%, raising questions about the future of its operations and investor confidence. Find out what led to this sharp downturn and what it means for the hospitality sector.
Key Takeaways
- 48% drop in net profit QOQ.
- 23% decline in revenue from operations.
- 54% increase in net profit YoY.
- Real estate segment reported no revenue.
- Ongoing projects in Colombo, Sri Lanka.
Mumbai, July 16 (NationPress) ITC Hotels disclosed a remarkable 48% sequential decline in its net profit, recording Rs 133 crore in Q1, down from Rs 257 crore in Q4 FY25.
Revenue from operations also saw a significant drop of over 23%, falling from Rs 1,060.62 crore in the March quarter to Rs 815.54 crore in the June quarter, based on its stock exchange disclosures.
The company's total income mirrored this downward trend, arriving at Rs 859.72 crore in Q1 FY26, which is 21.76% lower than Rs 1,098.81 crore from the previous quarter.
Year-on-year (YoY), ITC Hotels achieved a 54% increase in net profit, climbing from Rs 87 crore in Q1 FY25 to Rs 133 crore in Q1 FY26.
The revenue from operations also rose 15.5% annually, increasing from Rs 706 crore to Rs 816 crore.
This annual growth instilled confidence among investors, driving the company’s shares up nearly 4% to an intra-day high of Rs 237 on the National Stock Exchange (NSE).
In this quarter, the hotel segment alone generated Rs 801 crore in revenue, improving from Rs 690 crore during the same quarter last year.
However, this figure is a decline when compared to Rs 1,043 crore in the preceding quarter. Notably, the real estate division reported no revenue this quarter.
ITC Hotels is actively developing upscale branded residences in Colombo, Sri Lanka, indicating that revenue from these initiatives will be acknowledged only after their completion and sale.
The company's expenses for Q1 totaled Rs 675 crore, which reflects a 13% increase from Rs 596 crore in the same period last year.
Nevertheless, this figure is 10% lower than the Rs 750 crore reported in the March quarter. The primary expenses were linked to food and beverage costs, employee benefits, and finance charges.
Point of View
It's crucial to note that while ITC Hotels has experienced a significant profit drop, the year-on-year growth indicates resilience. This fluctuation reflects broader market conditions and consumer behavior post-pandemic, reinforcing the need for adaptability in the hospitality sector.
NationPress
16/07/2025
Frequently Asked Questions
What caused ITC Hotels' profit to decline?
The decline in profit can be attributed to a drop in revenue from operations, as well as increased expenses in food and beverage consumption, employee benefits, and finance costs.
How did ITC Hotels perform year-on-year?
Year-on-year, ITC Hotels reported a 54% increase in net profit, indicating strong annual growth despite the recent quarterly decline.
What is ITC Hotels' revenue from operations?
In Q1 FY26, ITC Hotels' revenue from operations was Rs 815.54 crore, down from Rs 1,060.62 crore in the previous quarter.
What are ITC Hotels' future projects?
ITC Hotels is currently developing upscale branded residences in Colombo, Sri Lanka, with revenue to be recognized post-completion.
How did investors react to ITC Hotels' financial report?
The company’s year-on-year growth helped build investor confidence, leading to a nearly 4% rise in its share price.
