ITC Hotels to Be Removed from Sensex and BSE Indices as Shares Open at 30% Discount

 New Delhi (The Uttam Hindu): ITC Hotels will be removed from 22 BSE indices before trading begins on Wednesday, February 5, following its demerger from ITC. The company, which was spun off from ITC, had been temporarily included in the Sensex and other indices to help passive funds adjust their portfolios. After trading separately since January 29, ITC Hotels was initially added to the indices for a brief period  allowing investors and index funds to rebalance their holdings. The shares of ITC Hotels debuted at Rs 188 per share on the BSE and Rs 180 per share on the NSE, representing a discount of over 30% compared to the discovered price of Rs 260 on the NSE and Rs 270 on the BSE.

According to a notice from the BSE, since ITC Hotels' shares did not hit the lower circuit limit by the cutoff time, the company will be removed from all BSE indices before Wednesday's trading session. In the notice, the BSE confirmed that the company would be dropped from the indices, effective prior to market open on February 5, 2025. At the close of the last session, ITC Hotels’ shares were priced at Rs 165, down 4.16%. Initially, the company had a market valuation of Rs 39,126.02 crore at the time of listing, but that figure has since fallen to Rs 34,266.48 crore.

The announcement of its removal from the Sensex triggered selling pressure, with index funds offloading shares worth over Rs 400 crore. Another Rs 700 crore in selling is expected when the stock is removed from the NSE Nifty. As part of the demerger, ITC Ltd retained a 40% stake in ITC Hotels, with the remaining 60% distributed to ITC shareholders at a 10:1 ratio. ITC has stated that the total acquisition cost for 100 shares of ITC Hotels is Rs 54,040.

Despite the short-term fluctuations in its stock price, ITC Hotels has reported solid operational performance. Its Average Room Rate (ARR) increased from Rs 7,900 in FY19 to Rs 12,000 in FY24, marking a rise of 51.9% with a compound annual growth rate (CAGR) of 8.7%. Similarly, the Revenue Per Available Room (RevPAR) rose from Rs 5,200 to Rs 8,200 during the same period, a 57.7% increase with a CAGR of 9.5%. In FY24, room sales contributed 52% to total revenue, with food and beverage accounting for 40%.