ITC Hotels Share Price Under Pressure as Stock Exits Sensex & BSE Indices

Market Performance

ITC Hotels'' share price was in focus on February 5, 2025, as the stock was officially removed from the Sensex and other BSE indices before the start of trading. This move follows the company's recent listing on the Indian stock exchanges on January 29 after its demerger from ITC Ltd.

On February 4, 2025, the stock closed 4.16% lower at ₹164.65 per share on the BSE, ahead of the expected exclusion from indices. This removal is anticipated to trigger passive selling worth over ₹400 crore from index funds tracking the Sensex. Moreover, an additional ₹700 crore worth of selling is expected as the stock is removed from NSE Nifty 50.

Why Was ITC Hotels Removed from Sensex & BSE Indices?

ITC Hotels' stock was temporarily included in the Sensex and other indices to allow for portfolio rebalancing by passive funds. However, the company's non-compliance with index inclusion requirements resulted in its removal.

As per BSE's official notice, since ITC Hotels did not hit the lower circuit by the cut-off time (2 PM on February 4), it was excluded from all BSE indices effective from the opening of the trading session on February 5.

ITC Hotels Share Price Performance & Market Valuation

• Listing Price:
  • BSE: ₹188 per share
  • NSE: ₹180 per share
• Discount to Discovered Price:
  • NSE: 30% discount (₹260 per share)
  • BSE: Over 30% discount (₹270 per share)
• Market Capitalization:
  • Initial valuation at ₹39,000 crore
  • Dropped to ₹34,266 crore by February 4

ITC Hotels Demerger Details

ITC Hotels was demerged from ITC Ltd., one of India's largest FMCG-to-cigarette conglomerates. The demerger followed a 1:10 share ratio, meaning existing ITC shareholders received 1 ITC Hotels share for every 10 ITC Ltd. shares held.

• Demerger Effective Date: January 1, 2025
• Demerger Record Date: January 6, 2025

ITC Hotels Business & Future Plans

ITC Hotels remains one of India's largest hospitality chains, operating 140 hotels with approximately 13,000 keys as of October 2024. The company is expanding aggressively, with a goal of increasing its portfolio to 200+ hotels and 18,000+ keys by 2030.

The company's financial performance has shown strong growth in the hospitality sector:

• Average Room Rate (ARR): ₹12,000 in FY24 (up from ₹7,900 in FY19)
• Revenue Per Available Room (RevPAR): ₹8,200 in FY24 (up from ₹5,200 in FY19)
• Revenue Breakdown:
  • 52% of room sales
  • 40% from food & beverage services

Summary

ITC Hotels' share price experienced pressure following its removal from the Sensex and BSE indices, which triggered significant passive selling. Despite this, the company remains a major player in India's hospitality sector, with strong financial performance and ambitious expansion plans.