1 week Ago
ITC share price dropped more than a percent on Friday ahead of its demerger record date next week. The company has ITC Hotels demerger record date as on January 6 and ITC shares will turn ex-date for the demerger on that day. This means ITC shareholders whose names will appear in the company’s books as on Monday, January 6 record date , will be eligible for the ITC Hotels shares.
ITC Hotels demerger ratio is 1:10, i.e. shareholders will get one share of ITC Hotels for every 10 ITC shares held.
Stock exchanges BSE and NSE will hold a special trading session on January 6 to discover the fair price of ITC Hotels shares. Hence, today is the last day to buy ITC shares to receive ITC Hotels shares following the demerger on the stock exchanges. ITC Hotels stock will be listed within 60 days from the date of receipt of NCLT Order, i.
e. December 16, 2024. ITC Hotels demerger effective date was January 1, 2025.
Should you buy ITC shares? Analysts believe today’s drop in ITC share price can be a good opportunity to buy the stock of cigarette-to-hotels conglomerate for a long term investment perspective. “Buying ITC shares ahead of the demerger record date could be a good opportunity for long-term investors. ITC’s cigarette business is expected to continue strong volume growth, supported by its dominant market position and pricing power.
Additionally, the company is focused on improving margins in its non-cigarette FMCG segment, which should drive overall profitability in the near term,” said Akriti Mehrotra, Research Analyst, StoxBox. Post-demerger, ITC will focus on its core cigarette and FMCG businesses, benefiting from a more asset-light structure, improving capital efficiency and returns. This shift is expected to improve ITC’s return ratios substantially.
While ITC's stock price will adjust downward by Rs. 20-22, its focus on improving profitability offers an attractive long-term upside, Mehrotra added. Analyst at Centrum broking also noted that the proposed reorganization would ensure continued interest of ITC in the hospitality business with sharper focus and optimal cost structure banking on its brand equity and goodwill.
“ITC is demerging the hotel business when times are ripe and that moment has now arrived. We expect in FY27E, hotel business revenues to reach at ₹ 45.7 billion with an EBITDA margin of ~35% led by strong growth in domestic demand for the hospitality sector.
Based on our back of the envelope calculations we assign EV/EBITDA on FY26/27E at 30x (20% disc. to Indian Hotels) to arrive ₹ 36 per share value (40% ITC’s holding & 20% hold disc.) and would adjust ₹ 17 per share (4% on CMP) from ITC,” Centrum Broking said.
Overall, it has a positive outlook on this development and retains a ‘Buy’ call with ITC share price target of ₹ 583 apiece. ITC Hotels Stock Price Calculation ITC Hotels share price will be calculated based on the difference between the closing prices of ITC shares on January 3, 2025, and open price of ITC discovered during the SPOS (special pre-open session) on January 6, 2025. According to analysts, ITC share price is expected to be adjusted by ₹ 22 - 25 on January 6, reflecting its 40% stake in the hotel business and incorporating a 20% holding discount.
As per the demerger scheme, ITC Hotels will issue equity shares directly to the shareholders of ITC in a manner that about 60% stake is held directly by ITC shareholders proportionate to their shareholding in ITC and remaining about 40% stake to continue with ITC. Overall, existing ITC shareholders will hold 100% of ITC Hotels, i.e.
about 60% directly and balance of about 40% through their shareholding in ITC. At 1:20 PM, ITC shares were trading 1.39% lower at ₹ 482.
45 apiece on the BSE . Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
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