The shares of ITC Ltd started trading on the bourses on Monday, reflecting the demerger of the hotels business and paving the way for listing of the hospitality company in a month.
After a special trading session designed for price discovery of the hotel shares, the ITC stock started trading at ₹455 apiece compared with the previous close of ₹482 on Friday, adjusting for a value of ₹27 a share for the demerged hospitality business.
The long-awaited demerger, aimed at unlocking value for shareholders and sharpening focus on the hospitality business, has been effective from January 1, 2025 and January 6 was considered as the record date to determine shareholders eligible to get ITC Hotels shares.
ITC had received an approval from the Calcutta bench of the National Company Law Tribunal (NCLT) for the scheme of arrangement for the hotel business demerger on October 4 and the certified copy of the order was received on December 16. ITC has 60 days (mid-February) to list the company from the date of receiving the certified copy.
ITC shareholders are going to get one share of ITC Hotels for every 10 shares held at ITC Ltd. Some of the analysts are expecting a share price of ₹100-125 for ITC Hotels when it starts trading, even as the adjustment of ₹27 a share indicates at a higher price.
“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 share on a conservative basis,” Prashanth Tapse, senior VP (research), Mehta Equities Ltd, said.
ITC Ltd will hold a 40 per cent stake directly in ITC Hotels Ltd, while the largest shareholder group BAT will hold around 15 per cent. The London-based tobacco major BAT had said that it has no plans to stay invested in the hospitality arm of ITC going forward.
The ITC stock closed the day with a cut of 2.75 per cent, or ₹12.5 a share, to close at ₹442.5 on the BSE.
Strong footing
ITC Hotels will start its solo journey with a zero debt balance sheet and cash and cash equivalent of ₹1,500 crore.
Investments made by ITC Ltd in hospitality entities such as Fortune Park Hotels Ltd, WelcomHotels Lanka Pvt Ltd among others will be transferred to ITC Hotels.
However, financial investments made by ITC in other listed hospitality companies such as EIH Ltd and HLV Ltd (formerly Hotel Leelaventures) will be retained by ITC Ltd.
In a presentation to bourses last month, the company said ITC Hotels has a robust pipeline of growth going forward with 46 hotels having 4,300 keys. It has opened 28 managed properties in the past 24 months (up to October 2024) and it plans to open 1 hotel every month for the next 24 months.
