ITC HOTELS DEMERGER

ITC Limited, a prominent Indian conglomerate, has announced the demerger of its hotel business, effective January 1, 2025.


ITC HOTELS DEMERGER | ITC HOTELS | ITC STOCKS | ITC
PIC FROM INTERNET


Demerger Details:

  • Effective Date: January 1, 2025.
  • Shareholder Allocation: ITC shareholders will receive one equity share of ITC Hotels for every ten equity shares of ITC held.
  • ITC's Stake: Post-demerger, ITC will retain a 40% equity stake in ITC Hotels, with the remaining 60% held by existing ITC shareholders.

Strategic Rationale:

The demerger aims to unlock value for shareholders by allowing ITC Hotels to operate as an independent entity, focusing on growth and competitiveness in the hospitality sector. This strategic move enables ITC to concentrate on its core businesses, including FMCG, tobacco, and agriculture.

Financial Implications:

Analysts estimate that the demerged hotel business will have a value of approximately ₹25 per share, contributing to ITC's current target price of ₹530 per share.

Regulatory Approvals:

The National Company Law Tribunal (NCLT), Kolkata bench, approved the demerger scheme on October 4, 2024. Subsequently, ITC received the official order, facilitating the demerger process.

Market Reaction:

Following the announcement, ITC's share price increased by over 1%, reaching ₹475 per share on the Bombay Stock Exchange (BSE).

Future Prospects:

As an independent entity, ITC Hotels is poised to enhance its market presence and operational efficiency in the hospitality industry. The demerger is expected to provide strategic flexibility, enabling both ITC and ITC Hotels to pursue tailored growth trajectories and create value for their respective shareholders.