Hotel, realty stocks under pressure, slip up to 7% on Friday; here's why

At 12:40 pm; BSE Realty index, the top loser among sectoral indices, was down 2.7 per cent, as compared to 1.03 per cent decline in the BSE Sensex.

Share prices of hotel, real estate companies on Friday

 

Share prices of listed hotel and real estate companies were under pressure, falling up to 7 per cent on the BSE in Friday’s intra-day as both benchmarks - the BSE Sensex and the NSE Nifty - fell 1 per cent each after tensions between India and Pakistan worsened late on Thursday.

 

Indian Hotels Company (IHCL), Lemon Tree Hotels, EIH, Chalet Hotels, ITC Hotels, Samhi Hotels, EIH Associated Hotels and Ventive Hospitality dropped in the range of 3 per cent to 7 per cent.

 

DLF, Macrotech Developers (Lodha), Anant Raj, Godrej Properties, Prestige Estates Projects and Sobha were down between 3 per cent and 6 per cent in intra-day trade.

 

 

At 12:40 pm; the BSE Realty index was the top loser among sectoral indices, down 2.7 per cent, as compared to 1.03 per cent decline in the BSE Sensex. The realty index dipped 4 per cent in intra-day trade. 

 

Why hotel shares trade weak?

 

Hotel and tourism industry will be impacted by war-like situation between India and Pakistan. The tensions between India and Pakistan have led to closure of 27 airports across North, west and central India.

 

Closure of airports and travel restriction on areas close to the border (including Amritsar, Jalandhar, and Dharamshala) will have an impact on the business of travel and hospitaility due to cancellation of bookings during the holiday season, ICICI Securities said in a note.

 

If escalation continues for a while it will have a large impact on the business performance of the hotel companies in the near term. Among the hotel properties, the large impact of escalations is likely to impact Lemon Tree and IHCL. The brokerage firm said they will keenly monitor the situation ahead. Long term growth prospects of travel and hospitality are intact.

 

DLF shares near 52-week low

 

Share price of DLF, one of the oldest and largest real estate companies in India, dipped 6 per cent to ₹ 618 on the BSE in intra-day trade today. The stock was trading close to its 52-week low of ₹ 601.20 touched on April 7, 2025. It has corrected 33 per cent from its 52-week high level of ₹ 928.70 hit on September 26, 2024.

 

DLF is involved in the real estate development sector, encompassing construction, operation and maintenance of real estate properties. Its range of products includes residential properties, commercial office spaces, retail establishments (Malls) and hospitality ventures (Hotels and Clubs). 

 

Cyclicality in the real estate segment causes fluctuations in cash inflow. As against this, cash outflow towards projects and debt obligations are relatively fixed, resulting in substantial cash flow mismatch. Any decline in the pace of sales could lower the expected collections in the medium term.

 

DLF has significant plans of expanding its ongoing portfolio to maintain the growth momentum and strengthen its market presence in the existing as well as new micromarkets.

 

While new projects will offer diversification in terms of geography (expected launches in Goa, Tri City, etc), any decline in demand may adversely impact the cash flow position, according to rating agency ICRA.

 

Nevertheless, ICRA expects DLF to benefit from its strong brand and healthy affordability in the residential real estate market. In addition, being  a  cyclical  industry,  the real  estate  sector  is  highly  dependent  on  macro-economic factors, which exposes the Group’s sales to any downturn in demand.