The discovered price of shares of cigarette-to-soap conglomerate ITC Ltd stood at around ₹455 apiece on stock exchanges at the end of a special trading session on Monday to adjust for the spinoff of its hotels division.
The stock was priced at ₹455.60 per share on NSE at 10:00 am — lower by around ₹26 from Friday’s close of ₹481.60 — following the hour-long call auction session. On the BSE, the discovered price was ₹455, against the previous close of ₹482.
Notably, the Kolkata-headquartered conglomerate fixed the effective date for demerger of its Hotels business on January 1, 2025. The record date was fixed as January 6 for purposes of determining the shareholders of ITC Ltd to whom equity shares of ITC Hotels would be allotted pursuant to the demerger.
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“Most awaited ITC demerger gets price discovery at ₹455.60 and ₹27 adjusted towards ITC Hotels, based on previous closing during the Special Pre-Open Session. Discovery price of ITC Hotels was in line with our expectations. Now ITC shareholders get 1 share of ITC Hotels for every 10 held in ITC. As per the index demerger listing rules, ITC Hotels will be part of index and will be excluded from indices 3 business days after its listing date (if there are no circuit breakers),” said Prashanth Tapse, Senior VP (Research), Mehta Equities.
On NSE, ITC scrip closed the day at ₹442.65, and at ₹442.50 on BSE.
The Kolkata bench of the National Company Law Tribunal (NCLT) on October 4, 2024, sanctioned the scheme of arrangement amongst ITC Ltd and ITC Hotels Ltd.
Shares of ITC Hotels are to be listed within 60 days from date of receipt of NCLT Order (i.e. December 16, 2024) as per the SEBI rule. The date of ITC Hotels’s listing is yet to be announced.
“We are expecting the listing to be on or before February 2025, and based on the peer valuation expectation in the luxury hotel space, we are expecting the listing to be anywhere in the range of ₹100-125 per shares on conservative basis. ITC Hotels’ demerger is expected to unlock substantial shareholder value and enable the newly-formed company to focus on growth in the luxury hospitality sector,” Tapse added.
The diversified conglomerate will be holding a stake of about 40 per cent in the new entity — ITC Hotels — and the balance shareholding of about 60 per cent to be held directly by the conglomerate’s shareholders proportionate to their shareholding in it.
“We note the proposed reorganisation 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 holds 140 properties with ~13000+ keys (45 per cent owned) across 90+ locations under 6 brands in luxury, premium and budget segments and management has aims to reach 200+ hotels and 18,000+ keys (35 per cent owned) by CY30. We expect 13.8 per cent revenue CAGR over FY24-27E with an EBITDA margin of ~35 per cent led by strong growth in domestic demand for the hospitality sector,” Centrum Broking said in a note on January 1.
ITC Hotels, as a new entity post demerger, will have a strong zero debt balance sheet with cash and cash equivalents of ₹1500 crore to cater to robust growth going forward. The new entity has plans to open one hotel per month for the next 24 months.