The Economics of Religion in India

Wednesday, Jan 24, 2024

Last month, our research analysts met with the management of one of our portfolio companies with an up-and-running hotel in Ayodhya. This was early December, and we got to know that then itself, the bookings for their hotel were skyrocketing. The share hit upper circuits this month and the stock price of the company has gone up by over 50% since our analysts met the management. 

I will tell you more about this company towards the end. By now, you’d have understood that I’m talking about the Ram Mandir today, and of course, I’ll be talking numbers.

The Economics of Religion in India

We’re living in the 21st century and it often seems that religion has been losing significance, particularly among the youth. The reality, however, is very different. The way we perceive religion may have changed a bit, but religious values, particularly in a country like ours, continue to remain relevant. Not just India, but the Islamic pilgrimage Mecca in Saudi with 20 million annual visitors, and the Vatican City for Christians with 9 million visitors are testaments to the fact that religion still firmly holds its ground. 

Religion, as a very sensitive topic plays out in different forms from processions to festivals to riots and more. However, another thing it does is contribute to the economy of respective nations and cities significantly. With the spotlight on Ayodhya’s Ram Mandir, this feels like the right time to talk about India’s religious economy and how the Ram Mandir will contribute to it. 

Dive into Data: India is one of the most popular travel destinations in the world with tourism projected to contribute $443 bn in the next decade to our GDP and a major chunk of this tourism is spiritual tourism. 

Let’s understand the scope of religious tourism in India by estimating the number of visitors to India’s largest places of worship and the collections received by them. 

Dive into Data: The visual below shows numbers for five of the largest religious places in India. 

Although this is not it, in total, India welcomed over 1.5 million visitors to its religious places this year which meant a collection of 1.3 lac crore rupees for these religious places just in 2022. 

P.S.: Note that this number does not include what tourists spent on their travel, accommodation, and miscellaneous activities. India’s tourism industry is worth $15 bn currently with a double-digit CAGR of over 15%. 

Let’s now finally come to the topic in the limelight - The Ram Temple.

The Ram Mandir of Ayodhya

The temple and the land that it’s been built on has been a disputed social topic for decades now. It is a very sentimental topic for everyone involved and thus, I will only focus on the numbers that Ayodhya will see. 

Ram Mandir, the largest place of pilgrimage for Hindus is being built with a budget of 1800 crore rupees. Now anyone’s first response to this information would be that the cost of the project is humongous, but let me tell you, so are the benefits. Ram Mandir is more than just a pilgrimage, it is also the medium that’ll act as a major catalyst for Uttar Pradesh and Ayodhya’s economic growth. 

Ayodhya, the town that has seen only riots for the last couple of decades is now turning into a center of economic activity and development. 

Dive into Data: Ayodhya’s Ram Mandir is expected to surpass the footfall and revenue of both Mecca and Vatican City combined. Have a look at the numbers here:

The Ram Mandir, in total, is estimated to be around a 10 billion dollar project for Ayodhya as a new airport has been built, the railway station revamped, new townships are under construction, and more. The real estate prices in the city have already shot up multi-folds and so have accommodation charges. With around 1-1.5 lac devotees visiting the temple every single day, we can only imagine the economic boost that the local businesses will get. 

Quick Fact: Varanasi, currently the most visited religious city in India sees crores of visitors every year. Like all other temples, the Vishvanath temple in Varanasi has tiny flower and prasad shops all around it. But the surprising fact here is that the bidding for these tiny 100 sq ft shops starts at 50 lac rupees. This is just one of the many examples of the massive scope that religion in India has. 

Beneficiary Companies of Ram Mandir

1800 crore rupee temple, 10 billion dollar project, over 5 crore annual visitors, billions expected in revenue, and so on. These are big numbers that are yet to materialize. However, what has already materialized is several stocks that saw a rally because of their relationship with Ayodhya. Now, you can go on the web and just put Ayodhya Stocks and you’ll plenty of names, which is why I won’t talk about them all. 

Instead, I am talking about one of our PMS portfolio companies - Kamat Hotels Limited. As I mentioned earlier, our analysts met the management of this company and the company doesn't just have a running hotel in Ayodhya already, it also planning to build more owing to the strong demand outlook. The guidance from the management for the future too is positive as the city plans to have about 100 hotels, only 17 of which are already in place. 

Dive into Data: Below is the stock price chart for Kamat Hotels, look at how the share has rallied since December.

Economically, this is a huge opportunity for small and mid-cap companies sectors such as infrastructure, travel, hospitality, networking, and real estate will all flourish. Many have already bagged orders and projects in Ayodhya and will continue as rampant development will be seen in the city. 

Market Moments with Divam Sharma

This is Episode 9 of Market Moments with Divam Sharma. In weekly wraps on Saturday at 12 PM, we come live to discuss our favorites - stock markets and the economy. This Saturday at 12 PM, our CEO and founder, Mr. Divam Sharma will discuss:

- What's been up with the markets

- Ram Mandir's Impact on the Economy

- Budget Expectations

Happy Investing!

Sources and References

• Jefferies Report on Indian tourism

• The Hindu

• Business Line

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