ITC block deal update: ICICI Prudential MF, BofA Securities Europe among 60 buyers as BAT trims stake; cigarette stock rises

Hotel-to-cigarette conglomerate ITC’s shares rose on Thursday, continuing to gain for a second straight session, after more than 60 funds including ICICI Prudential Mutual Fund, SBI Mutual Fund and DSP Mutual Fund, picked stakes in the company as its biggest shareholder, British American Tobacco (BAT), trimmed its shareholding by 3.5 per cent. ITC shares strengthened by as much as Rs 3.2, or 0.7 per cent, to Rs 425.6 apiece in early deals on BSE.

At 10:06 am, ITC shares were up by Rs 2, or 0.5 per cent, at Rs 424.4 apiece on BSE.

Also read: BLOCK DEAL: Should you buy, sell or hold ITC shares after BAT trims stake

ITC shares were in the spotlight on Wednesday as British American Tobacco (BAT) offloaded 43.68 crore shares, amounting to 3.5 per cent of the Indian company’s equity, at Rs 400.25 per share, reducing its stake from 23.89 per cent to 20.39 per cent.

Around 60 funds bought a stake in ITC, including the Government of Singapore, which bought 9.15 crore shares or 0.7 per cent equity, ICICI Prudential Mutual Fund, which bought 8.06 crore shares or 0.6 per cent equity, and BofA Securities Europe, which picked 2.04 crore shares or 0.2 per cent equity, according to block deal data.

Societe Generale, Capital Income Builder, Citigroup Global Markets Mauritius and Morgan Stanley Asia Singapore were among the buyers.

In a separate development, BAT announced a buyback of 700 million pounds ($895 million) worth of shares this year after selling down its stake in ITC.

Why did BAT offload its stake in ITC?

BAT announced in February that it was "actively working" to reduce its roughly 29 per cent stake in the Kolkata, India-headquartered company which has interests in segments ranging from hotels to consumer packaged goods.

The stake sale would allow the maker of Dunhill and Lucky Strike cigarettes to pay down its debt and move faster toward the leverage range at which it could resume share buybacks.

Following the developments, JPMorgan maintained an 'overweight' rating with a target of Rs 490 apiece per share.

Also Read: BAT's stake sale in ITC: This could provide ITC Hotels with autonomy, say analysts; suggest 'buy on dips'

ITC share price performance

ITC shares have grown nearly 12 per cent in the past year, underperforming a 29 per cent rally in the headline Nifty50 index.

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