ITC Hotels removed from Sensex and BSE indices; here’s how stock reacted

shares of ITC Hotels, which made its stock market debut on January 29, 2025, were removed from the benchmark Sensex and other Bombay Stock Exchange (BSE) indices before trading begun today. The hotel arm of FMCG conglomerate ITC, which was recently demerged from its parent entity, was temporarily included in these indices to allow passive funds to rebalance their portfolios.

Reacting to the news, ITC Hotels shares opened 1.3% lower at ₹162.50 on the BSE, extending losses for the fourth consecutive session. On the other hand, ITC shares dropped 0.5% in opening trade, while the benchmark indices Sensex and Nifty belled the day at flat note.

ITC Hotels share price has fallen as much as 5% in the past three sessions. The ITC group stock touched its highest level of ₹189 on its market debut day, while it hit its lowest mark of ₹161.05 on February 1.

The hotel stock was listed at ₹188 apiece on the BSE on January 29, against the last discovered price of ₹270 determined at the special pre-open session conducted by the exchange on January 6, 2025. On the NSE, the stock debuted at ₹180 compared with the last discovered price of ₹260 apiece.  

Why ITC Hotels share was removed from BSE indices

The BSE on Tuesday notified that ITC Hotels will be removed from all the indices as it does not hit the lower circuit till the cut-off time. “As ITC Hotels did not hit the lower circuit till the cut-off time, the company will be dropped from all BSE indices effective prior to the open of trading on Wednesday,” the exchange said in a notice.

On February 4, ITC Hotels shares closed 4.16% lower at ₹164.65, with a market capitalisation of ₹34,266.5 crore, in an otherwise positive broader market. During the session, the hotel stock declined as much as 4.97% to hit a low ₹163.25.

All you need to know about ITC Hotels demerger

ITC launched its hotels business way back in 1975 with the acquisition of a hotel in Chennai which was rechristened 'ITC-Welcomgroup Hotel Chola' (now Welcomhotel) to earn high levels of foreign exchange, create tourism infrastructure and generate employment. Over the years, it has emerged as second biggest player in the hotel space after Tata group-owned Indian Hotels. Last year, the conglomerate decided to demerge hotel business and list it as a separate entity to allow the hospitality business to focus on growth and maximise shareholder returns. 

Under the scheme of demerger, ITC shareholders received one ITC Hotels share for every 10 shares they own in the company, with the cigarettes-to-FMCG-to-hotels conglomerate retaining a 40% stake in the demerged entity. British American Tobacco (BAT), which owns 25% stake in ITC, got 15% stake in the hotel business, while the balance shareholding were distributed among existing shareholders in proportion to their holdings in the company.

With a strong debt-free balance sheet and ₹11,000 crore of total assets (including ₹1,000-1,500 crore of cash and cash equivalents), ITC Group today operates a bouquet of 6 brands – ITC Hotels, Storii, Mementos, Welcomhotel, Fortune, and WelcomHeritage - distributed across segments. ITC Hotels and Storii cater to luxury segment, WelcomeHotel in upper upscale, and Fortune in mid to upscale space. Storii is a boutique hotel and WelcomHeritage is a heritage property. Its current portfolio includes 140 properties with 13,000 rooms, out of which 45% are owned, and 55% are under management contracts. Around 80% of the owned room inventory is in metros (distributed evenly in top 6 cities).

Going ahead, the group aims to increase inventory to 18,000 rooms in the next 4-5 years, and 200 hotels from 140 currently. In the past 2 years, the company has managed to achieve its target of opening 1 hotel per month and expects similar trajectory in next 24 months.

(DISCLAIMER: The views and opinions expressed by investment experts on fortuneindia.com are either their own or of their organisations, but not necessarily that of fortuneindia.com and its editorial team. Readers are advised to consult certified experts before taking investment decisions.)