ITC Limited: The demerger of ITC’s hotel division was a major event that occurred on January 6, 2025. Investors now have a rare chance to purchase and sell shares of the parent company (ITC Limited) as well as the recently independent hotel entity as a result of this split. Let’s learn about the key Highlights of this deal and its advantages for the financiers.
Overview of ITC Limited
Founded in 1910, ITC Limited is a multifaceted conglomerate that operates in the following industries: hotels, paperboards and packaging, agribusiness, information technology, and fast-moving consumer goods, which include personal care, foods, cigars and cigarettes, education and stationery products, incense sticks, and safety matches. Originally known as the Imperial Tobacco Company of India Limited, the company was formed on August 24, 1910.
The company’s name was changed back in 1970 (India Tobacco Company Limited) and then in 1974 (ITC Limited) as the ownership of the business eventually became more Indianized. The full stops were eliminated from the Company’s name on September 18, 2001, in appreciation of the ITC Limited’s diverse business portfolio.
Details of the Demerger
All the key Highlights of the demerger are given down below:
| Date of Recording | January 6, 2025 |
| Stake of ITC | 40% of the demerged company will still be owned by ITC Limited Hotels. |
| Exchange Ratio | For every ten shares of ITC Limited held, shareholders will get 1 share of ITC Hotels. |
| ITC Hotels Listing | Soon after the demerger, ITC Limited Hotels should be listed on stock exchanges. |
| Pricing Discovery | The hotels entity’s pricing was found to be approximately ₹455 per share. |
Recent Developments
- Approval Bodies: The demerger has been approved by regulatory organizations such as the CCI (Competition Commission of India) and the National Company Law Tribunal (NCLT).
- Approval of Shareholders: The demerger plan has already received approval from ITC Limited shareholders. Analysts estimate that both firms could unlock value, and the market is expecting a good reaction to the demerger.
Advantages for Financiers
- Possibility of Greater Returns: Following the demerger, both businesses might see a spike in stock prices due to heightened investor interest and better market perception.
- Value Unlocking: Investors will be able to evaluate and fund each business according to its unique strengths and growth potential once the demerger is anticipated to reveal the full worth of ITC Limited and ITC Hotels.
- Investment Flexibility: Depending on their unique risk tolerances and investment strategies, investors can now decide whether to invest in ITC Hotels, ITC, or both.
- Greater Focus: ITC may now focus on its core operations, which include paper, cigarettes, and fast-moving consumer goods. This could result in increased growth rates and greater performance.
Final Verdict
For investors, ITC Hotels’ demerger offers a substantial opportunity. The demerger should help the market and shareholders by releasing the value of both businesses and increasing investment flexibility. However, before making any judgments about their investments, investors are encouraged to do extensive study and use prudence.
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