ITC Hotels to be Removed from Sensex, BSE Indices on February 05, 2025

ITC Hotels will be removed from 22 BSE indices before trading begins on Wednesday, February 5. The company, which was spun off from ITC Ltd., had been temporarily included in the Sensex and other indices to facilitate portfolio rebalancing by passive funds.

ITC Hotels Removal from Indices and Market Impact

ITC Hotels began trading as a separate entity on January 29. In a notice, BSE stated that since ITC Hotels did not hit the lower circuit before the cut-off time, it will be dropped from all BSE indices effective before market opening on Wednesday. Shares of ITC Hotels last closed at ₹165, down 4.16%.

Due to its exclusion from the Sensex, index trackers had to offload shares worth over ₹400 crore, with an additional ₹700 crore worth of selling expected when the stock is removed from the NSE Nifty.

Stock Performance and Market Valuation

The demerged entity debuted on the NSE and BSE at ₹180 and ₹188 per share, respectively, commanding a market capitalisation of ₹39,126.02 crore at listing. Since then, the valuation has declined to ₹34,266.48 crore.

Under the demerger structure, 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 acquisition cost for 100 shares of ITC Hotels stands at ₹54,040, according to the company.

Strong Operational Growth

Despite the stock’s short-term volatility, ITC Hotels has demonstrated strong operational performance. The company’s Average Room Rate (ARR) has surged from ₹7,900 in FY19 to ₹12,000 in FY24, marking a 51.9% increase, with a compound annual growth rate (CAGR) of 8.7%.

Similarly, Revenue Per Available Room (RevPAR) rose from ₹5,200 to ₹8,200 over the same period, reflecting a 57.7% increase (CAGR of 9.5%).

In FY24, room sales contributed 52% to the company’s total revenue, while the food and beverage segment accounted for 40%, highlighting ITC Hotels’ strong business fundamentals amid ongoing market adjustments.

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