As BAT Seeks to Provide its Shareholding by 2026, ITC Hotels’ Share Price Drops 3%
Following British American Tobacco Plc’s announcement on February 14 that it would reduce its interest in the hotel industry by the following year, ITC Hotels’ stock plunged more than 3%.
In intraday trading on Friday, February 14, shares of the newly listed ITC Hotels fell more than 3% after British American Tobacco Plc (BAT), ITC’s largest stakeholder, announced it would reduce its ownership of the hotel company by the following year.
During an earnings call, BAT’s CEO, Tadeu Marroco, stated that the company had no interest in acquiring a long-term stake in an Indian hotel chain. He continued that the corporation would search for the ideal time to divest to maximize shareholder value.
“We intend to divest and use the proceeds to ensure that we reach the two-and-a-half-to-two leverage corridor by 2026,” Marroco stated. According to the company’s most recent ownership pattern, BAT owns 15.29% of the demerged hotels firm.
In March 2024, BAT paid ₹17,491 crore for a 3.5% share in ITC. After the transaction, BAT’s stake in ITC dropped from 29% to 25.5%. Through this transaction, BAT also began its long-term share repurchase program, which has £900 million scheduled for 2025 and £700 million planned for 2024.
ITC Hotels Share Price Impact:
After BAT announced its plans to divest, ITC Hotels’ share price fell 3.44% to a day’s low of ₹164.05 per share. Slightly higher than its previous finish of ₹169.90 per share, the stock began at ₹170.10 but quickly lost gains to trade near the 52-week low level of ₹160.55.
On January 29, shares of ITC Hotels Ltd. went public on Indian stock markets. The more prominent ITC Ltd., well-known for its FMCG and cigarette operations, split into ITC Hotels. When ITC Hotels first began trading on the BSE and NSE, its shares were worth ₹188 apiece.
A ‘purchase’ recommendation was recently applied to ITC Hotels by Jefferies, which cited the possibility of a valuation rerating. Given that the present discount to Indian Hotels Co Ltd (IHCL) may eventually shrink, Jefferies has set a target price of ₹240.
