Budget’s push for tourism: Check out small-cap bets of Tata Nifty India Tourism Index Fund

Tourism, one of the fastest growing sectors in India, received a capital expenditure allocation of Rs 2,450 crore in Budget 2024, which is about a 45 percent increase from the previously revised allocation. In her budget speech on July 23, Finance Minister Nirmala Sitharaman said, "Tourism has always been a part of our civilization. Our efforts in positioning India as a global tourist destination will also create jobs, stimulate investment and unlock economic opportunity for other sectors.”
Experts believe that the government’s focus on infrastructure development and initiatives to promote cultural and heritage tourism are expected to drive growth and create new opportunities for the tourism sector.

“For any sector or theme to do well, one needs to think if it is tailwinded or headwinded..There is the government’s thrust on road connectivity, infrastructure, railways, airports, airlines and tourism. Also, business, leisure and medical tourism are booming. The disposable income for individuals has gone up over the last few years that could find it's way into either investment or discretionary expenditure. Tourism, we think is an important part of that.”, says Anand Vardarajan, chief business officer, Tata Asset Management.
Tata Mutual Fund recently launched India’s first tourism index fund that tracks the Nifty India Tourism Index, which in turn covers the entire tourism value chain from Nifty 500 index universe. Currently, 17 stocks are part of the index.

As far as performance is concerned, Nifty India Tourism Index has underperformed the Nifty 500 across most time frames. The stocks in the Nifty India Tourism Index have just 1.4 percent weightage in the Nifty 500.
Vardarajan explained that comparing a thematic to the broader index would not be fair. “Last year, for instance, IT services would have been about $187 billion in terms of contribution to GDP. On the services side, tourism was $212 billion. But in terms of representation in the Nifty, there is not a single tourism or aviation stocks on it. We think the big opportunity is in time to come. As the sector becomes bigger, some of these stocks may be featured in the top 50 companies. And that really is the opportunity,” he said.
Below are the small-cap stocks that are part of the Nifty India Tourism Index. Portfolio data as on June 30, 2024.
Source: Niftyindices.com and ACEMF.

BLS International Services
Sub-sector: Professional Services
No. of active equity MF schemes holding the stock: 3

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Chalet Hotels
Sub-sector: Hotel, Resort & Restaurants
No. of active equity MF schemes holding the stock: 41

Devyani International
Sub-sector: Consumer Food
No. of active equity MF schemes holding the stock: 46

EIH
Sub-sector: Hotel, Resort & Restaurants
No. of active equity MF schemes holding the stock: 31

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Easy Trip Planners
Sub-sector: Tour, Travel Related Services
No. of active equity MF schemes holding the stock: NA

Lemon Tree Hotels
Sub-sector: Hotel, Resort & Restaurants
No. of active equity MF schemes holding the stock: 22

Mahindra Holidays & Resorts India
Sub-sector: Hotel, Resort & Restaurants
No. of active equity MF schemes holding the stock: 11

Restaurant Brands Asia
Sub-sector: Restaurants
No. of active equity MF schemes holding the stock: 16

Safari Industries (India)
Sub-sector: Household & Personal Products
No. of active equity MF schemes holding the stock: 44

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Sapphire Foods India
Sub-sector: Consumer Food
No. of active equity MF schemes holding the stock: 36

VIP Industries
Sub-sector: Household & Personal Products
No. of active equity MF schemes holding the stock: 15

Westlife Foodworld
Sub-sector: Restaurants
No. of active equity MF schemes holding the stock: 42

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