Posted on February 5, 2025, by Niftynews
ITC Hotels Shares to be Delisted from Key Indices
ITC Hotels shares are set to be removed from the Sensex and other BSE indices today, February 5, 2025. This move follows the stock temporary inclusion for passive fund rebalancing after its listing on January 29, 2025.
While this removal could bring short-term volatility, long-term investors are watching closely to assess ITC Hotels’ growth strategy, financial position, and future expansion plans.
Why Are ITC Hotels Shares Being Removed?
After ITC Hotels demerged from ITC Ltd, its shares were temporarily included in the Sensex and BSE indices to facilitate portfolio adjustments for passive investment funds.
However, since the stock did not hit the lower circuit by 2 PM on February 4, 2025, the BSE confirmed its exclusion from major indices before market opening today.
Impact of ITC Hotels’ Removal from Indices
- 📉 Passive Selling Pressure: Passive funds tracking these indices will offload shares, leading to temporary selling pressure.
- 🔻 Stock Price Dip: With an estimated ₹400 crore worth of selling from Sensex removal and ₹700 crore from Nifty 50 exclusion, stock prices may see fluctuations.
- 📊 Market Reaction: ITC Hotels shares dropped 4.16% on February 4, closing at ₹164.65.
Despite this, long-term investors may see this as a buying opportunity, given ITC Hotels’ financial strength and future expansion plans.
ITC Hotels Demerger – What Investors Need to Know
The ITC Hotels demerger allowed ITC Ltd to unlock value in its hospitality segment and enable ITC Hotels to operate independently.
Key Demerger Details
- Demerger Ratio: 1:10 (ITC Ltd shareholders received 1 ITC Hotels share for every 10 ITC Ltd shares).
- Effective Date: January 1, 2025
- Record Date: January 6, 2025
- ITC Ltd’s Holding: 40% stake retained, while 60% was distributed to shareholders.
With ITC Hotels now operating as a separate entity, it is focusing entirely on the hospitality sector, free from ITC Ltd’s FMCG, cigarette, and agri-business operations.
ITC Hotels Business Performance & Growth Prospects
Despite short-term selling pressure, ITC Hotels’ long-term growth outlook remains positive, backed by strong financials and expansion plans.
Financial Performance Over the Years
- 📈 Average Room Rate (ARR): ₹7,900 (FY19) → ₹12,000 (FY24) 🔺 +51.9% Growth
- 📊 Revenue Per Available Room (RevPAR): ₹5,200 (FY19) → ₹8,200 (FY24) 🔺 +57.7% Growth
- 🍽 Revenue Breakdown:
- Room Sales: 52%
- Food & Beverage (F&B): 40%
ITC Hotels has maintained consistent revenue growth, driven by higher occupancy rates and premium pricing strategies.
Expansion Plans – ITC Hotels Future Strategy
🏨 Current Portfolio: 140 hotels with 13,000 operational keys (as of Oct 2024)
📢 Target: 200+ hotels and 18,000+ keys by 2030
Unlike some competitors, ITC Hotels owns 35% of its properties, while the rest operate under franchise and management agreements, allowing scalable expansion with lower capital investment.
Financial Strength & Competitive Edge
- 💰 Debt-Free & Strong Cash Reserves: ITC Hotels has minimal debt, giving it financial flexibility for future growth.
- 🚀 Return on Capital Employed (RoCE): ~20%, reflecting high profitability.
- 📊 ARR Growth: +20% YoY, driven by higher pricing power.
- 📈 RevPAR Growth: +18% YoY, reflecting strong occupancy rates.
- 🏢 Occupancy Rate: 69% in FY24, highlighting stable demand.
ITC Hotels’ financial stability and premium market positioning give it a strong edge in the competitive hospitality industry.
What This Means for Investors
With ITC Hotels no longer part of Sensex & BSE indices, investors may see short-term price fluctuations due to passive selling. However, long-term fundamentals remain solid, making it a good stock for patient investors.
Short-Term vs. Long-Term Outlook
✔ Short-Term Risks:
- Temporary price correction due to index exclusion.
- Selling pressure from passive fund exits.
✔ Long-Term Potential:
- Debt-free balance sheet & healthy cash flow.
- Aggressive expansion plans (200+ hotels by 2030).
- Premium pricing power & strong brand presence.
🎯 Ideal for Investors: Those with a long-term perspective, who believe in India’s hospitality and tourism growth.
Final Thoughts: Should You Invest in ITC Hotels Shares?
Despite temporary selling pressure, ITC Hotels remains a financially strong company with a clear growth strategy.
- For Traders: Expect short-term volatility due to index exclusion.
- For Long-Term Investors: Fundamentals remain strong, making this a good buy at lower levels.
- For Growth Seekers: ITC Hotels’ expansion and premium pricing strategy make it a strong player in the hospitality sector.
As ITC Hotels continues expanding in India’s booming travel industry, it remains a stock worth watching.
📌 Key Takeaway: Short-term volatility is expected, but ITC Hotels’ long-term growth potential remains solid. Investors should focus on fundamentals rather than short-term price movements.
