ITC Demerges Hotel Business: All You Need to Know

On January 6, 2025, ITC officially split off its hotel business to create a new company, ITC Hotels. This move marked a significant change for the company and ITC shareholders. Here’s all you need to know. 👇

Why Demerge?

• ITC's hotel business contributes about 10% of its revenue, but it holds potential for greater growth.
• The split allows ITC Hotels to grow independently as a standalone brand.
• ITC Hotels can now focus solely on expanding its hospitality business.

Impact on ITC Ltd's Share Price

After the split, ITC trades ex-demerger:

• Ex-Demerger: The stock now trades without the value of the split-off business, i.e., ITC Hotels is no longer included in ITC Ltd's share price.
• On January 6, 2025, the share price decreased by ₹26.

Does This Mean a Loss for ITC Shareholders?

Not exactly.

• ITC shareholders receive 1 ITC Hotels share for every 10 ITC shares they own.
• While ITC's price fell, shareholders now hold shares in two companies.

Post-Split Price:

• ITC shares ended at ₹442.65, reflecting an 8.09% drop.
• Shareholders now have a mix in their portfolios:
  • FMCG & Tobacco through ITC Ltd.
  • Hospitality through ITC Hotels.

Holdings After the Split

• ITC Ltd retains a 40% stake in ITC Hotels.
• The remaining 60% is distributed among current ITC shareholders.

What Happens Next?

• ITC Hotels will list on the stock market around mid-February 2025.
• Shareholders can now benefit from the dual-growth story of:
  • ITC Ltd
  • ITC Hotels