Today, the much-awaited demerger of ITC Hotels from its parent company ITC was finally executed, with ITC shares starting to trade without its hotels business included. Analysts predict a fair price of Rs 264 per share for ITC Hotels, with shareholder eligibility for its shares being decided based on holdings of ITC shares as of today. The newly demerged ITC Hotels will soon be listed on the bourses, with Nomura expecting a listing price in the range of Rs 200-300 per share. In the meantime, ITC Hotels will remain a part of stock indices where ITC is a constituent, and its listing may be postponed in case of trading circuit limits being hit. This corporate action is expected to significantly impact shareholders of ITC, a prominent blue-chip stock in the Indian market.
ITC Hotels Demerger: A Major Corporate Restructuring
On August 25, 2023, ITC Ltd., the Indian conglomerate, completed the long-awaited demerger of its hospitality arm, ITC Hotels. This corporate restructuring has significant implications for ITC shareholders and the Indian stock market.
Background
ITC Hotels is one of India's leading hotel chains, operating over 100 properties across various brands. The demerger was driven by ITC's strategy to focus on its core consumer and agricultural businesses, while allowing ITC Hotels to pursue its own growth trajectory.
Demerger Details
Eligible ITC shareholders holding shares as of August 25, 2023, received one share of ITC Hotels for every 10 shares of ITC Ltd. The demerger was tax-free in the hands of shareholders.
Stock Market Impact
Analysts predict that ITC Ltd. shares could see a modest decline in the near term due to the reduction in its earnings from the hotel business. However, in the long run, the demerger could unlock value for ITC shareholders as the separate entities focus on their respective growth strategies.
ITC Hotels Listing
ITC Hotels is expected to be listed on the Indian stock exchanges shortly. Nomura expects the listing price to be in the range of Rs 200-300 per share. The listing could be delayed if trading circuit limits are hit on the day of listing.
FAQs
1. What is the rationale behind the demerger?
The demerger allows ITC to focus on its core businesses while giving ITC Hotels the flexibility to pursue its growth plans independently.
2. What are the benefits for ITC shareholders?
Shareholders have received additional shares in ITC Hotels, which could potentially provide returns in the future.
3. What is the expected impact on ITC Ltd. shares?
Analysts predict a modest decline in the near term, but bullish in the long run.
4. When will ITC Hotels be listed on the stock exchange?
Shortly, although the exact date is yet to be announced.
5. What is the estimated listing price for ITC Hotels shares?
Nomura estimates Rs 200-300 per share.
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