ITC Hotels' IPO, Adani vs. Birla, & MyGate's ₹110 Cr. Playbook 💸

A weekly wrap of insights from both public and private markets.

We are back with our new newsletter edition, which covers three important business topics in one go. Today, we discuss ITC Hotels’ ₹39,000 Cr. IPO, Adani vs. Birla in the heating cement war, and MyGate’s ₹110 Cr. societies playbook.

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Applications for our flagship four-week growth program are open. This program is for you if you are interested in mastering four key growth pillars: customer acquisition, onboarding, retention, and monetization.

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ITC Hotels’ ₹39,000 Cr. IPO 🏦

First, some context.
ITC, the conglomerate that does it all—FMCG, cigarettes, hotels, agri, paper, you name it—has listed its hotel business separately on Dalal Street. Of this, ITC holds 40%, and the remaining 60% is distributed to shareholders in a 10:1 ratio for every ITC stock.

How big is ITC’s hotel business?
ITC’s revenue is dominated by FMCG (70% of sales), with cigarettes alone contributing 38% of total sales. Interestingly, the hotel business makes up only 4% of the total revenue. But despite being small, their hotels do massive ~₹3,000 Cr. in yearly revenues — 7 times the revenue of Taj Hotels. The listing has a market capitalisation of ₹39,000 Cr. at the moment.

Fact.
While the industry’s average EBITDA margins range from 20-30%, ITC Hotels operate at a good margin of ~33%. Also, in this category, the more premium you go, the better your margins get. Currently, the hotel chain includes luxury hotels, mid-scale hotels, and heritage properties under brands like ITC Grand, WelcomHotel, and Fortune Hotels etc.

What’s in for ITC?
It unlocks better valuation scenarios since multiples get tricky when multiple sectors get mixed under the same group. This helps create more shareholder value while streamlining operations—keeping hotels independent and allowing the main entity to focus on its core higher margin businesses with focus. On the lighter side, this might help the notorious meme stock perception of ITC too. That said, markets are in a volatile space right now with the budget also lined up for tomorrow.

What’s ahead?
We’ll definitely see ITC expanding its hotel footprint, especially with the high-end travel sector boom. This demand is clearly shown in the numbers—Taj, Oberoi, and other luxury players have nearly doubled sales in 2024 from their 2022 levels. But the real game is in execution—how capital-light and debt-free you want to be. Right now, ITC Hotels owns 45% of its properties and manages the rest but is now shifting to an asset-light model, aiming to own 35%. Let’s watch ahead how things line up for them.

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Adani vs. Birla: Cement War 🥊

First, some context.
India’s cement space is heating up. If you didn’t already know, Adani (Ambuja Cement) and Birla (UltraTech Cement) are in a battle for market dominance. UltraTech is acquiring the Indian business of Heidelberg — a German cement company — for about ~₹3,300 Cr. But why is it a big deal?

The consolidation spree.
Currently, Ultratech is the market leader with an estimated market share of 25%, while Adani has ~14%. The key growth lever for both? relentless acquisitions across the country. Last year, we have seen more than 10 deals in the cement space already. This big consolidation wave is happening as these pan India players buy out small regional players and establish a duopoly-like-scene in the market. For context: Adani entered the cement sector with a bang by acquiring giants like Ambuja Cements and ACC for ~₹80,000 Cr. and since then, there has been no looking back in the inorganic growth cycle.

Have we seen this before?
We’ve seen this play out across sectors—food delivery, ride-hailing, e-commerce, and telecom. In the sectors where margins are lower and up-front capital costs are high, it becomes more and more difficult for small players to survive. This is “economies of scale 101” — more volumes and market share eventually means better economics for a lot of businesses where scale is a key leverage.

As a result, the distressed deals become easier and easier for the largest players — a proof of how power law works in business. And as you know, Adani and Birla have no shortage of capital to deploy for these acquisitions. Also, 2024 wasn’t the best year for the industry in terms of growth and margins anyway, with smaller players suffering and ending up on the acquisition plate.

Why this much excitement?
India’s per capita cement consumption stands at 280-330 kg, way below the world average of 470-520 kg. Btw, China has the highest—1,400-1,500 Kg. We are currently at part with Brazil. Also, one thing is clear—there’s an expected upside in both private and public construction spending. With the Indian government ramping up spending on housing and infrastructure, coupled with a rising trend in homeownership and corporate construction, the upcoming surge has both industry behemoths highly optimistic.

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MyGate’s ₹110 Cr. societies playbook 💡

First, some context.
An "unsexy" business that started in 2016 now powers security for most gated communities across India’s top-tier cities. MyGate has quietly built a ₹110+ Cr. annual revenue machine that is also EBITDA positive. Let’s break down what they cracked.

Betting on the tailwinds.
First, the company made a bet that aligned with India’s macro-tailwinds. Two major shifts were happening—rapid urbanization and a surge in gated communities across India. Fact: India’s urban population is expected to double by 2030, with urbanization rising from 34% to 40%. They saw the wave coming and positioned themselves right.

Solved power dynamics with de-friction.
The company spotted a major problem—friction in the daily workflow of security guards or big gated communities, whether it was handling deliveries, househelp, or cooks. Guards had to manually confirm entries, often calling residents for approval. This also created a power imbalance, where guards held key information and control. MyGate stepped in to fix it by handing over the rights to “residents” with the power of approving or declining the access request.

Top-down penetration.
MyGate started with the Bangalore where users would be more open to accept this. Also, they did not approach all the gated communities together. They targeted the biggest and most aspirational societies like Prestige, Brigade, etc. The playbook is simple: Convert the most premium ICPs first → Make the offering look aspirational & generate word of mouth → make the tier 2 and 3 ICP come chasing you.

Fact.
Initially, the company didn’t charge for SaaS recurring fees from the users. Cut to now, 50% of the users are paying a monthly SaaS fee for adoption.

Retention masterstroke.
The company has become the one-stop solution for communities with more value-added services. Be it accounting, billing, parking management, or the help desk—they do it all. The logic is to become more valuable for your core users → increase their retention so that they don’t go to any other player → get more trust → and eventually add more revenue sources to the topline. Smartlocks, again, is one interesting category that they are betting on.

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Btw, we even hosted Abhishek Kumar, the Co-founder at MyGate for our Inner Circle Podcast series. You can watch the podcast here.

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Also, we launched a new episode of GrowthX Wireframe, where we cover the Haldiram-Temasek deal in-depth 💫

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