ITC Hotels Faces BSE Indices Removal and Market Volatility, But Analysts Stay Bullish on Long-Term Growth

ITC Hotels will be removed from 22 BSE indices on February 5, 2025, following its demerger from ITC Ltd. The stock faced selling pressure, with a 4.16% drop in its share price after its exclusion from the Sensex. Despite short-term volatility, analysts remain optimistic about its strong operational growth and long-term potential in the hospitality sector.

CONTENTS:

• ITC Hotels to Be Removed from Sensex and BSE Indices, Shares Face Passive Selling Pressure
• ITC Hotels Excluded from Sensex, Dr Agarwal’s Health Care Faces Lackluster Debut, NSE Reports Revenue Decline
• ITC Hotels to be Removed from BSE Indices Amid Short-Term Volatility, Analysts Remain Optimistic About Long-Term Growth
• ITC Hotels to be Removed from BSE Indices Amid Market Volatility, Strong Operational Growth Supports Long-Term Outlook

ITC Hotels Faces BSE Indices Removal and Market Volatility, But Analysts Stay Bullish on Long-Term Growth

ITC Hotels to Be Removed from Sensex and BSE Indices, Shares Face Passive Selling Pressure

ITC Hotels Faces BSE Indices Removal and Market Volatility ITC Hotels shares will be removed from the Sensex and other BSE indices before trading starts today, February 5, 2025. The stock, which was listed on January 29, was temporarily included in these indices for portfolio rebalancing by passive funds. As it did not hit the lower circuit by the cut-off time on February 4, the stock will be excluded from all BSE indices.

On February 4, ITC Hotels’ share price closed at ₹164.65 on the BSE, down 4.16%. Its exclusion from the Sensex is expected to trigger passive selling worth over ₹400 crore by index trackers, and a further ₹700 crore in selling when it is removed from the NSE Nifty 50. The stock had been listed at ₹188 on the BSE and ₹180 on the NSE, a 30% discount to the discovered price of ₹260–270 per share. Since its listing, its market value has dropped from over ₹39,000 crore to approximately ₹34,266 crore as of February 4.

ITC Hotels is a demerged entity from ITC Ltd, which retained a 40% stake in the new company, with the remaining 60% distributed to shareholders. The demerger was effective from January 1, 2025, and the record date was January 6. Despite this, ITC Hotels has shown strong growth, with increases in its Average Room Rate (ARR) and Revenue Per Available Room (RevPAR) in recent years. The company plans to expand its portfolio to over 200 hotels by 2030.

ITC Hotels Excluded from Sensex, Dr Agarwal’s Health Care Faces Lackluster Debut, NSE Reports Revenue Decline

ITC Hotels Faces BSE Indices Removal and Market Volatility ITC Hotels was removed from the Sensex and other BSE indices on Tuesday, February 4, 2025, after being temporarily included to facilitate passive fund portfolio rebalancing. The luxury hotel operator, which started trading separately on January 29, was excluded after it did not hit the lower circuit by the cut-off time. As a result, it will be dropped from all BSE indices before trading opens on February 5.

The stock closed at ₹165, a 4.2% decline, with over ₹700 crore worth of shares traded. The exclusion from the Sensex triggered passive selling worth over ₹400 crore, and further selling of ₹700 crore is expected as ITC Hotels is removed from the NSE Nifty.

Meanwhile, Dr Agarwal’s Health Care, an eye-care firm, had a weak market debut, with its stock closing slightly below its IPO price. The company’s ₹3,027 crore IPO, which faced lower demand from retail and high-net-worth individual investors, ended with the stock at ₹401.6, just under the issue price of ₹402.

Additionally, the National Stock Exchange (NSE) reported a 3.5% sequential decline in revenues for Q3 2024, impacted by restrictions on index derivatives. However, the exchange saw a 94% year-on-year increase in net profit, driven by a ₹1,155 crore gain from selling its stake in Protean e-Gov Technologies.

ITC Hotels to be Removed from BSE Indices Amid Short-Term Volatility, Analysts Remain Optimistic About Long-Term Growth

ITC Hotels Faces BSE Indices Removal and Market Volatility ITC Hotels will be removed from 22 BSE indices on February 5, 2025, following its temporary inclusion to assist passive funds in rebalancing their portfolios. The company, which started trading independently on January 29 after being demerged from ITC, was initially added to stock indices for a brief period.

ITC Hotels shares debuted at ₹188 on the BSE and ₹180 on the NSE, representing a 30% discount from the discovered price of ₹260 on the NSE and ₹270 on the BSE. The stock closed at ₹165, marking a 4.16% decline. The company’s market capitalization, which was ₹39,126 crore at listing, has now dropped to ₹34,266 crore. The exclusion from the Sensex triggered selling pressure, with index funds offloading shares worth over ₹400 crore, and an additional ₹700 crore in selling is expected as the stock is removed from the NSE Nifty.

Following the demerger, ITC Ltd retained a 40% stake in ITC Hotels, while the remaining 60% was distributed to shareholders in a 10:1 ratio. Despite the short-term volatility, ITC Hotels has shown strong growth in its operational performance, with a significant rise in Average Room Rate (ARR) and Revenue Per Available Room (RevPAR).

ITC Hotels to be Removed from BSE Indices Amid Market Volatility, Strong Operational Growth Supports Long-Term Outlook

ITC Hotels Faces BSE Indices Removal and Market Volatility ITC Hotels is set to be removed from 22 Bombay Stock Exchange (BSE) indices before trading begins on February 5, 2025. This follows the company’s recent demerger from ITC Ltd. It was temporarily included in these indices to facilitate passive funds in adjusting their portfolios.

The company made its debut as an independent entity on January 29, with shares listing at ₹180 on the NSE and ₹188 on the BSE. However, due to the absence of the stock hitting the lower circuit limit, ITC Hotels will be excluded from the indices. As a result, shares closed at ₹165, down by 4.16%. This led to selling by index trackers worth ₹400 crore, with another ₹700 crore in selling expected once ITC Hotels is removed from the NSE Nifty.

The demerger saw ITC Ltd retain a 40% stake in ITC Hotels, while the remaining 60% was distributed to ITC shareholders in a 10:1 ratio. Initially, ITC Hotels had a market cap of ₹39,126 crore, which has since dropped to ₹34,266 crore.

On the operational front, ITC Hotels has shown strong growth, with Average Room Rate (ARR) increasing from ₹7,900 in FY19 to ₹12,000 in FY24, reflecting a 51.9% rise. Similarly, Revenue Per Available Room (RevPAR) rose from ₹5,200 to ₹8,200 during the same period. These increases are attributed to a rising demand in the premium lodging sector.

Despite the short-term volatility resulting from the index exclusion, analysts remain optimistic about ITC Hotels’ long-term prospects, highlighting its solid operational performance and position within the upscale hospitality market. The demerger is expected to allow ITC Ltd to focus more on its core businesses while continuing to provide brand support to ITC Hotels.