Top 6 Tourism Stocks in India

Remember the iconic ‘Incredible India’ campaign? This marked the start of an incredible voyage for Indian tourism. Today, the tourism industry is one of the most significant for our country, contributing an incredible US$ 199.6 billion to the GDP. The opportunities for investments in this vibrant sector are immense, with projections by IBEF stating that this figure will shoot up to US$ 512 billion by 2028.

Tourism stocks may be a boon in the future, and therefore, investing in them may be of advantage. In this context, it is worth noting that the Nation Stock Exchange (NSE) has recently introduced the Nifty Tourism Index India, which will track the performance of tourism stocks in India included in the Nifty 500 index. The travel and tourism sector is growing day by day, and the future may look even brighter. The purpose of the blog is to showcase investment opportunities that are growing in India’s travel and tourism industry.

India’s Travel & Tourism 

India’s travel and tourism domain has shown remarkable growth, with the nation witnessing a boom in becoming one of the global favorites among international travelers. The rise is backed by the heritage of its culture, vastness in various landscapes, and historical artifacts, making it a source of attraction for millions of tourists globally and in the country.

According to the Index of Travel & Tourism Development 2024 released by the World Economic Forum, India ranks 39th as the highest-ranking country in South Asia. This is a big jump from the 54th position in 2021. Travel and tourism are huge industries; they consist of several sub-industries, which directly as well as indirectly can gain from the overall growth in tourism in our country.

As you can see in the above image, the revenue from different industries of tourism has significantly increased post the covid era, where hotel industry and packaged holiday providers have seen the highest surge in their business. Hence, these two industries should be closely monitored to identify investment opportunities in tourism stocks in India. 

Sector Outlook: Travel & Tourism

The travel & tourism industry is expected to be broadly driven by the development of tourism infrastructure in the country which is majorly an increase in connectivity across means of transport. The gross booking in the travel and tourism industry is to grow at 26% CAGR post the COVID pandemic, as reported by India’s largest online travel app- Easy Trip Planners Ltd. 

The Indian travel and tourism industry is expected to record an annual growth of 7.1% per annum. In 2022, the Travel & Tourism sector contributed US$ 199.6 billion to the GDP, accounting for 5.9% of the total GDP, which is expected to grow at 10.35% CAGR by 2029. This could have a positive impact on our Indian economy as tourism is the third largest foreign exchange earner for the country.

The outlook of the travel and tourism sector is strongly influenced by government policies. In the 2024 interim Budget, ₹2,449.62 crore (US$ 294.8 million) were allocated to the tourism sector, which is a 44.7% increase from the previous fiscal year. Therefore, the growth in the overall sector has a direct positive impact on India’s tourism stocks. 

Segments of Travel and Tourism

The travel and tourism industry in India is a diverse sector encompassing several sub-industries. Since tourism involves the movement of people from one place to another to visit tourist attractions, transport is one of the major components of the tourism industry. Therefore the airline industry and railways form a major segment of tourism. 

Airline Industry:

• Dominated by both full-service carriers (like Air India, Vistara etc.) and low-cost airlines (such as IndiGo, SpiceJet, GoAir, and AirAsia India).
• Significant growth due to increasing domestic and international travel demand.
  

Railways:

• Indian Railways is one of the largest railway networks globally, connecting remote areas to major cities.
• Tourism-specific trains like the Maharajas’ Express cater to luxury travel experiences.

Next, accommodation serves as a foundational element for tourists to explore new destinations in the country. Hence, the hotel industry is another segment of the travel and tourism sector. 

Hotels and Accommodation:

• There is a wide range of budget to luxury hotels, resorts, and homestays.
• Major hotel chains like Taj Hotels, Oberoi Group, and Marriott International have a significant presence.
• Growth of online booking platforms has increased accessibility and convenience for travelers in hotels and accommodation industries. 

Other than accommodation there is demand for tour packages, which are offered by tour operators or travel agents. This is another industry which has showcased significant growth. 

Tour Operators and Travel Agencies:

• It plays a crucial role in organizing tours, providing packages, and coordinating travel logistics.
• Cater to diverse segments including adventure tourism, cultural tours, and medical tourism.
• Online travel agencies (OTAs) like MakeMyTrip, Yatra, and Cleartrip have expanded their market presence.

India has several natural and cultural sites, historical places, monuments, and wild life sanctuaries which attract tourists all over the world. Therefore the segment forms a cultural and religious tourism in our country. 

Cultural and Heritage Tourism:

• India’s rich cultural heritage attracts tourists from around the world.
• Popular destinations include the newly inaugurated Ram-mandir in Ayodhya, Taj Mahal, Jaipur, Varanasi, and Kerala’s backwaters.
• Government initiatives like Swadesh Darshan and PRASAD promote sustainable tourism development.

India has some of the world’s healthcare services and often patients come to visit the country especially for medical treatments. Therefore medical tourism is another important segment of the travel and tourism industry. 

Medical Tourism:

• India is a prominent destination for medical treatments due to high-quality healthcare services at competitive prices.
• Major cities like Chennai, Mumbai, and Delhi are hubs for medical facilities catering to international patients.

Things like hiking, paragliding, mounting and campaigning have become a new cult in the world and India has a lot to offer here. 

Adventure Tourism:

• Offers a variety of activities such as trekking in the Himalayas, white-water rafting in Rishikesh, and wildlife safaris in national parks.
• Growing interest among domestic and international travelers seeking unique and adventurous experiences.

Key Drivers of Tourism Market

In order to identify the top tourism stocks in India, it is necessary to understand the sector’s growth drivers. Here are some of the key drivers of the tourism industry: 

1. FDI Inflow: India opened up to 100% of FDI in travel and tourism that includes construction of hotels, resorts, and recreational facilities. The aim is to stimulate development and growth in the tourism industry. Between April 2000 and December 2023, India’s hotel and tourism sector received $17.1 billion worth of total FDI equity inflow representing 2.57% of total FDI inflows across several other sectors. 
2. Infrastructure Development: The level of infrastructural development will be one of the forces that drive the Indian travel and tourism market. In general, development of infrastructure in any country will attract tourists from all over the world. Tourism encourages expansion of hotels, resorts & restaurants, transport infrastructure (aviation, roads, shipping & railways), healthcare facilities.
3. Rising Demand: Gen-Z as part of the new generation is excited to explore different corners of the globe. Additionally, the middle class is expanding with disposable incomes growing thus boosting travel demand too. It is essential to mention that, according to the projections by the IMF World Economic Outlook (April – 2021), India’s GDP per capita in 2021 is likely to be US$ 2,191 at the current prices. It is expected to reach US$ 3,209.67 by 2024. India’s GDP grew 8.4% in the third quarter of 2024. Our country’s per capita income will likely grow by nearly 70%. 
4. Government Policies: The Ministry of Tourism launched the Swadesh Darshan Scheme to promote the country’s integrated development of thematic tourist circuits. The inauguration of Ram-mandir in Ayodhya supported the religious tourism of India. Now, in the next 3 to 4 years, Ayodhya will be having 50 to 100 hotels. This city is a global religious destination, and with the opening of the fourth property of Taj Hotels in this place, huge developments are anticipated. Recently, the Prime Minister also inaugurated the new campus of Nalanda University at Rajgir, Bihar, which could boost tourism all across the country.

Hence, the travel and tourism sector is expected to explode in the coming years, and NSE has launched the Nifty India Tourism Index, which tracks the performance and offers instant diversification into the different segments of the travel and tourism industry.

Nifty India Tourism Index

The National Stock Exchange of India started the Tourism Index with a vision to capture the potential growth of the Indian travel and tourism sector in such a way that investors can be a part of this expansion through index funds, ETFs, etc.

Composition of the Index

The Nifty tourism index comprises a maximum of 30 companies that are selected from the Nifty 500 index. The stocks are diversified into three sectors that form part of the index: Consumer Services (66.98% of the index), the services sector (29.73% of the index), and consumer durables (3.29% of the index).

Top 10 Constituents of Nifty India Tourism Index

The index has a base date and base value of April 01, 2005, and 1000, respectively. It is reconstituted semi-annually and rebalanced quarterly. The index in the last five years has given a return of 19%. 

If you are someone who wants to invest in the travel and tourism industry of India passively, then you can simply invest in an Index fund, thematic fund, or ETF. But if you are interested in making an active investment in one of the best tourism stocks in India, we have a dedicated investment theme: Tourism.

Best Tourism stocks in India 

• Interglobe Aviation Ltd. IndiGo is the largest and leading airline in India serving 86 destinations, 24 of them international. It has been providing customers with a no-hassle experience while delivering low fares, on-time flights, and absolutely no frills. The airline is pivotal in providing the much-needed aviation infrastructure into the country, resulting in increased trade and tourism and, therefore, all-round economic growth. 
  
  The company is expected to benefit from the significant increase in rise in passenger traffic both domestically and internationally in years to come, as shown in the image below: 

To get a detailed insights about the India’s aviation industry and how IndiGo is be one of the best tourism stocks, read: Indian Aviation Industry Sector Outlook and Investing Opportunities

• Apollo Hospitals Enterprise Ltd. Apollo Hospitals is India’s largest private integrated healthcare services provider. They are focusing more on enhancing the prospects of medical tourism substantially, benefiting its healthcare services and increasing the inflow of foreign exchange into India. It won several medical tourism awards during the year and in the past.
• The Indian Hotels Company Ltd.  This Tata Group company is one of the largest hospitality-focused enterprises in South Asia, and it is of Indian origin. The company’s brands include Taj, Vivanta, Ginger, etc. It has businesses ranging from iconic luxury to upscale and budget stopovers. So, a pick up in tourism would result in higher occupancy in hotels. Tourists visiting new places look for accommodation and many other facilities for a comfortable stay. Thus, the expansion and growth of tourism will have a strong influence on the hotel industry’s business performance.
• Indian Railway Catering And Tourism Corporation Ltd. The Indian Railways plays a significant role in the growth and development of domestic as well as foreign tourism. It runs many tourism-specific trains to promote tourism in India. It provides various promotional schemes and tour packages to attract domestic and foreign passengers. It has recently announced a Bharat Darshan Special Tourist Train which will take tourists to major destinations in the country and learn about India’s heritage and culture. 
• EIH Ltd. The company owns and manages high-end luxury hotels and cruisers under the brand of Oberoi, Trident, and Maidens. Additionally, it provides a variety of services including flight catering, airport restaurants, travel and tour services, car rentals, project management, and corporate air charters, all catering to various aspects of travel and tourism.
• Narayana Hrudayalaya Ltd. It has a network of multispecialty hospitals spread across multiple locations. It has a strong presence especially in Eastern India which makes it a popular medical tourism destination for countries like Bangladesh, Bhutan, Nepal & Myanmar. It has tie up with many International insurance partners to provide medical treatment for the patient traveling from overseas.

In the past 1 years, these tourism stocks has given an astonishing return as you can see form the image below: 

We are currently witnessing a strong growth in the travel and tourism sector of India and you must analyze the stock’s financials before including it in your portfolio. Moreover the list of stocks under the tourism theme may have direct or indirect implications based on the growth of the tourism industry. Additionally, the stocks can be added, modified or removed anytime. Hence make sure to follow our investment theme in regular intervals to stay up to date. 

The Bottom Line

The travel and tourism sector in the country is poised for really impressive growth, given its rich history, culture, vast geographical breadth, and expanding infrastructure!! With ongoing government investments in tourism initiatives and the modernization of infrastructure, this sector will cater to both domestic visitors and international tourists. In addition, the increasing middle class and inflation-adjusted disposable incomes are expected to drive domestic travel inward. The tourism experience will be enriched by new technologies and sustainable practices working in harmony to protect India’s abundant natural heritage. These positive developments not only hope to rejuvenate the Indian Travel and Tourism industry but also propel it towards growth, contributing significantly both economically and globally.

Happy Investing!