ITC stock adjusts for hotel biz post demerger; check latest share price

ITC hotels demerger: January 6, 2025, was the 'record date' to finalise the eligible ITC shareholders who would receive shares of ITC Hotels once it gets listed on the NSE and BSE

ITC-ITC hotel demerger: ITC share price settled at Rs 455 per share on the BSE on Monday, January 6, 2025, at the end of the special session conducted by the exchanges for the price discovery of the conglomerate’s hotel business.

 

On the NSE, ITC stock settled at Rs 455.6 per share after the special session.

 

The stock exchanges, NSE and BSE, conducted a special trading session for ITC shares today to determine the value, via price discovery method, of ITC’s hotel business post the demerger.

 

Remember, January 6, 2025, was the ‘record date’ to finalise the eligible ITC shareholders who would receive shares of ITC Hotels once it gets listed on the NSE and BSE.

 

ITC-ITC Hotels demerger ratio

Last year, ITC decided to demerge its Hotel business into a separate listed entity to unlock value for shareholders. It fixed the demerger ratio at 1:10, which meant that shareholders holding 10 shares of ITC, as on January 6, 2025, will receive one share of ITC Hotels post the demerger.

 

Post the said demerger, ITC will continue to hold a 40-per cent equity shareholding in the Hotel business.

ITC-ITC Hotel demerger: Analysts’ take

 

According to analysts at SBI Securities, the demerger of ITC’s asset heavy hotels business would lead to the improvement in return ratios and cash flows.

 

“Investors should continue to hold on to ITC shares, post demerger, for long term gains given the diversified FMCG portfolio and steady growth in its core businesses. We believe, post demerger, ITC medium term fair value could be Rs 525-550 per share,” they said.

 

Those at B&K Securities said that downside in ITC stock seems limited due to the enhanced prospects from cigarette business, value unlocking from demerger of hotels business, and likelihood of paper business returning to normal growth from next quarter.

 

“We expect return ratios to improve by 500 bps post the hotel business demerger. We retain our ‘Buy’ rating on ITC stock, valuing the ex-hotel biz entity at a P/E of 29x on FY27E EPS of Rs 20.40,” it said. The brokerage has a target price of Rs 588 on ITC stock.