This tourism finance stock nearly doubled in 1 month; Quant MF buys stake

In the past two trading days, shares of Tourism Finance Corporation of India have rallied 26% after Quant Mutual Fund bought 600,000 shares via bulk deal

Shares of Tourism Finance Corporation of India (TFCI) hit a record high of Rs 247.25, surging 18 per cent on the National Stock Exchange (NSE) in Monday's intraday trade, amid heavy volumes.

In the past two trading days, the stock of financial institution has rallied 26 per cent after Quant Mutual Fund bought 600,000 shares, or 0.66 per cent stake, in TFCI on Friday, February 2, via bulk deal on the NSE. The mutual fund bought the shares at price of Rs 208.57 per share, exchange data shows.

In the past one month, the stock price has been nearly doubled, zooming 97 per cent from a level of Rs 125.80.

At 12:21 pm, TFCI was trading 16 per cent higher at Rs 242.30, as compared to 0.28 per cent gain in the Nifty50. The counter saw a huge trading volumes with a combined 13.26 million shares, representing 14.67 per cent of total equity of the company, having changed hands on the NSE and BSE till the time of writing this report.

As on December 31, 2023, the promoters (Life Insurance Corporation of India [LIC] and The Oriental Insurance) and the promoters' group comprising Koppara Sajeeve Thomas and Pransatree Holding Pte Ltd own 17.67 per cent stake in the company.

TFCI was established to cater to the needs of the tourism industry and to ensure priority funding of tourism-related projects. TFCI provides financial assistance to tourism-related projects such as hotels, resorts, restaurants, amusement parks, etc, primarily in the form of long-term loans as well as by investing in the debentures, equity, preference shares, etc, of such companies.

Meanwhile, Finance Minister Nirmala Sitharaman said during her interim Budget speech that Indian states will be encouraged to undertake comprehensive development of iconic tourist centres, branding, and marketing them at a global scale.

The interim Budget proposed to greater enhanced infrastructure and connectivity to facilitate domestic tourism on islands, including Lakshadweep. Sitharaman announced that both spiritual tourism and iconic tourist spots will be promoted, and states will be granted long-term interest-free loans to develop world-class facilities to promote tourism.

To encourage tourism, plan is to provide long term interest free loans to the state, projects for port connectivity, tourism infrastructure, and amenities will be taken up. Under 'Viksit Bharat' scheme, provision of around Rs 75,000 crore as 50 years interest free loan is proposed for state government has an outlay of Rs 1.3 trillion, she said in her speech.

Meanwhile, factors like setting-up of 50 new airports, helipads, aerodromes to improve connectivity across the country and growth in medical tourism sector (projected to grow at 19 per cent CAGR from 2022 to 2032) is likely to increase travel and boost demand for hotels.

As per estimates, the travel market in India is projected to reach $ 125 billion by FY27 from an estimated $ 75 billion in FY20. The Indian hotel market including domestic, inbound and outbound was estimated at $ 32 billion in FY20 and is expected to reach $52 billion by FY27, driven by the surging demand from travellers and sustained efforts of travel agents to boost the market, TFCI said in its FY23 annual report.

Domestic expenditure on tourism is expected to rise due to the growing income of households. Several niche offerings such as medical tourism & eco tourism are expected to create more demand. By 2029, India’s tourism sector is expected to reach Rs 35 trillion ($ 488 billion) with a growth of 6.7 per cent and accounting for 9.2 per cent of the total economy, the company said.