Last Updated:
ITC Hotels shares were temporarily included in the Sensex and other indices for portfolio rebalancing by passive funds
ITC Hotels shares to be delisted from Sensex and other BSE indices today
The share price of ITC Hotels will be in focus on Wednesday, as the stock will be removed from the Sensex and other BSE indices before trading begins on February 5, 2025. ITC Hotels, a demerged entity of ITC Ltd, was listed separately last month.
The stock was temporarily included in the Sensex and other indices for portfolio rebalancing purposes by passive funds. ITC Hotels shares began trading on Indian stock exchanges on January 29.
Since ITC Hotels did not hit the lower circuit limit by the cut-off time of 2 pm on Tuesday, February 4, it will be removed from the BSE indices.
According to a notice on the BSE, “As ITCHOTELS did not hit the lower circuit by the cut-off time, the company will be dropped from all BSE indices effective before the opening of trading on Wednesday, February 5, 2025.”
Shares of ITC Hotels last closed at Rs 165, down 4.16%. As the stock is set to be removed from the Sensex, index trackers had to sell shares worth over Rs 400 crore, with another Rs 700 crore in selling expected when it is also excluded from the NSE Nifty.
The demerged entity was listed on the NSE and BSE at Rs 180 and Rs 188 per share, respectively, with an initial market valuation of Rs 39,126.02 crore. However, its market value has since dropped to Rs 34,266.48 crore. Under the demerger, ITC Ltd retained a 40% stake in ITC Hotels, while the remaining 60% was distributed to ITC shareholders in a 10:1 ratio. The total cost of acquiring 100 shares of ITC Hotels stands at Rs 54,040.
ITC Hotels has demonstrated strong operational performance, with its Average Room Rate (ARR) rising from Rs 7,900 in FY19 to Rs 12,000 in FY24, marking a 51.9% increase (CAGR of 8.7%). Revenue Per Available Room (RevPAR) also saw a significant rise from Rs 5,200 to Rs 8,200 during the same period, a 57.7% increase (CAGR of 9.5%). In FY24, room sales accounted for 52% of total revenue, while food and beverage made up 40%.
Analysts believe that ITC Hotels will benefit from a strong industry cycle, with limited new capacity and growing consumer demand for premium accommodations. The parent company, ITC, will continue to provide brand support and governance, which should enhance ITC Hotels’ growth prospects while improving ITC’s own return profile post-spin-off of its capital-intensive hotel business.
Despite potential near-term volatility in ITC Hotels shares, analysts remain positive about the company’s long-term outlook as it solidifies its position in the hospitality sector.
