ITC trades ex-hotels business: What it means for its shareholders?

Shares of ITC traded ex-hotels business on January 6, 2025 after the special pre-open session for ITC concluded at 10:00 am to indirectly value ITC Hotels.

On the NSE, the stock opened at Rs 455.6 per share, while on the BSE the scrip opened at Rs 455 per share.

Basis the price discovered, analysts at Equinomics have pegged ITC Hotels price at Rs 264 per share and are of the view that ITC Hotels valuation are in line with Indian Hotels.

For ITC Hotels, the price will be calculated as the difference between ITC's closing price on January 3, and the price of ITC discovered during the SPOS. This process helps figure out a fair price for ITC Hotels shares before they officially start trading. 

As per analysts and brokerages, price of ITC may be adjusted by Rs 22-25 due to the demerger effect.

Today is also the record date for the company's demerger, implying shareholders eligibility for the shares of the demerged entity will be decided today basis ITC shares held by investors in their portfolio today. Under the demerger scheme, shareholders of ITC will be eligible to get 1 share of ITC Hotels for every 10 share held by them. Pertitently, ITC will hold a 40 per cent stake in the newly demerged Hotels business and the remaining 60 per cent will be owned by the existing shareholders in proportion to their holding in ITC.

ITC Hotels listing and its price determination

ITC Hotels as per Zee Business research estimates may list on the bourses in 30-40 days. Further, until listing, shares of ITC Hotels will be seen at a constant price in all the indices where ITC is a constituent. In the Nifty and the Sensex indices, the stock will be the 51st and 31st constituent respectively, and will remain in the indices for three trading sessions following the listing.

In a case if the stock hits circuit limits, the exclusion will be postponed by two trading days each time.

Brokerage firm Nomura anticipated listing price for ITC Hotels in the range of Rs 200-300 per share.

Shareholder impact:

Satish Chandra Aluri, Lemonn Markets Desk states that this corporate action will impact shareholders of the bluechip stock-ITC

1. Dual Ownership: Shareholders gain exposure to ITC Hotels without additional investment, allowing them to benefit from growth in the hospitality sector alongside ITC's core businesses.

2. Re-rating Potential: Analysts anticipate that ITC's standalone valuation will align more closely with FMCG peers due to improved return ratios and focused growth. At the same time, ITC Hotels could emerge as a premium hospitality stock with its tailored growth strategies.