The much-awaited demerger of ITC Ltd’s hotel business into a separate entity, ITC Hotels Ltd, will officially take effect on January 1, 2025. The record date for the demerger has been set for January 6, 2025, which marks the ex-demerger date for ITC shareholders.
This move is expected to have significant implications for ITC shareholders, with many wondering how the demerger will affect their holdings and when they can expect to see the new ITC Hotels shares in their portfolios.
Existing ITC shareholders are in for a windfall as they will receive one share of ITC Hotels for every 10 shares of ITC held. However, to be eligible for this benefit, shareholders must hold ITC shares before the ex-date of January 6, 2025. Therefore, the final date to qualify for ITC Hotels shares is January 3, 2025. If you buy ITC shares after the record date (January 6), you will not be eligible to receive the ITC Hotels stock.
The demerger of ITC’s hotel division will take place through a special pre-open session, with the newly formed entity, ITC Hotels, being assigned an intrinsic value based on this session. However, shareholders will not see the ITC Hotels shares immediately reflected in their portfolios.
Since the shares have yet to be transferred to the qualified shareholders and approval from the exchanges is still pending, ITC Hotels shares will remain dormant within the benchmark indices, such as Nifty 50 and BSE Sensex.
Once the shares are credited and trading is allowed, ITC Hotels will be removed from the indices after three trading days, unless there is a delay due to a circuit breaker on the first two days of trading.
In October 2024, ITC announced the demerger of its hotel business, a move that was approved by the National Company Law Tribunal (NCLT) bench of Kolkata. Earlier, in June 2024, shareholders overwhelmingly supported the proposal, with 99.6% of public institutions and 98.4% of public non-institutions voting in favour of the demerger.
The split aims to create greater strategic focus and synergies within the business. Following the demerger, ITC will retain a 40% ownership stake in ITC Hotels, with the remaining 60% being directly owned by shareholders.
In Q2 FY25, ITC posted a consolidated net profit of ₹4,993 crore, reflecting year-on-year growth of 2%. The company’s revenue from operations saw a significant rise of 15.6%, reaching ₹22,282 crore.
The hotel division also performed well, with a revenue growth, reaching ₹789 crore. However, the profit before tax (PBT) for the hotel division saw a slight decline to ₹117 crore, down from ₹133 crore in Q2 FY24.
On December 31, 2024, ITC share price traded 1.03% higher at ₹482 at 2:43 PM (IST), while the BSE benchmark Sensex plunged by 141.20 points to 78,106.94 ITC share price reached a 52-week high of ₹528.55 September 27, 2024 and a 52-week low of ₹399.30 on March 3, 2024. As per BSE, the total traded volume for the stock stood at 4.24 lakh with a turnover of ₹20.28 crore.
At the current price, ITC shares are trading at a price-to-earnings (P/E) ratio of 28.98x, based on its trailing 12 months. Whereas the market cap stood at ₹6,03,377.23 crore.
As of September 30, 2024, FIIs held a 40.53% stake in ITC shares, while Domestic Institutional Investors (DIIs) owned 44.59%, and retail investors held 14.83%.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.
Investments in the securities market are subject to market risks, read all the related documents carefully before investing.
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