ITC Hotels Demerger: What to Expect as Shares Hit the Spotlight Today
ITC Ltd., the well-known cigarettes-to-FMCG conglomerate, is making headlines today, January 6, as its hotel business, ITC Hotels, prepares to spin off into a separate entity listed on the stock exchanges.
Under this demerger plan, ITC shareholders will receive 1 equity share of ITC Hotels for every 10 ITC shares they hold. ITC will retain a 40% stake in the new entity, while the remaining 60% ownership will be distributed among existing shareholders, proportional to their stakes in ITC shares.
What’s Happening Today?
The spotlight is on ITC’s stock movement, as a special pre-open session will take place from 9:00 AM to 9:45 AM to determine its adjusted price post-demerger. Regular trading for ITC shares will resume at 10:00 AM.
For ITC Hotels, its initial price will be calculated by subtracting ITC’s adjusted share price (discovered during the pre-open session) from its January 3 closing price. On its listing day, ITC Hotels’ shares will be included in all NSE and BSE indices at a constant price for the day and the subsequent three business days.
Key Details for Investors
Although the demerged ITC Hotels shares will show up as a placeholder in portfolios after the pre-open session, trading on these shares will only start once they are officially listed on the exchanges.
Predictions for ITC Hotels’ Share Price
Market analysts have provided a range of estimates for ITC Hotels’ likely debut price:
- Nuvama expects the shares to open at ₹150–₹175 per share.
- Sharekhan aligns closely, predicting ₹150–₹170 per share, citing the potential for better price discovery post-listing.
- Nomura, however, offers a more optimistic outlook, suggesting a price of ₹200–₹300 per share. If this holds, the hotel business could achieve a market capitalization of ₹42,500–₹62,200 crore.
Impact on ITC’s Share Price
ITC’s share price is expected to dip by approximately ₹22–₹25 later today. This reflects the transfer of its hotel business into a separate entity while factoring in a 20% holding discount for its retained stake, as per Nuvama’s analysis.
Why This Matters
The demerger could unlock value for ITC’s hotel business, which might attract premium valuations compared to its current position within the ITC shares umbrella. This separation enables a clearer price discovery, which could benefit shareholders over the long term.
