Today marks a pivotal moment for shareholders of ITC Limited as the company undergoes the demerger of its hotels business. With significant adjustments in share prices and trading dynamics, investors are keenly observing the developments surrounding ITC and its newly formed entity, ITC Hotels.
Key Highlights of the Demerger
- Demerger Date: January 6, 2025, is the record date for the demerger, determining which shareholders will receive shares of ITC Hotels.
- Share Allocation: For every 10 shares of ITC held, shareholders will receive 1 share of ITC Hotels. Post-demerger, ITC will retain a 40% stake in ITC Hotels, while shareholders will hold the remaining 60% directly.
Share Price Movements
As of January 6, 2025, ITC shares have experienced a notable decline. Here are the key price points:
- Day’s Low: ₹455
- Day’s High: ₹461.75
- Previous Close: ₹481.60
- Opening Price: ₹455.60 (down approximately 5.5%)
The share price adjustment is reflective of the market’s response to the demerger and the separation of ITC Hotels from its parent company.
Grey Market Premium (GMP) Insights
Following the demerger announcement, analysts have been tracking the grey market performance of ITC Hotels. The expected grey market premium (GMP) for ITC Hotels is projected to be around ₹15 to ₹20 per share. This indicates a positive sentiment towards the newly formed entity as it prepares for its listing.
Important Dates to Note
- Demerger Record Date: January 6, 2025
- Expected Listing Date for ITC Hotels: Mid-February 2025
- Allotment of Shares: Eligible shareholders will receive their shares in their Demat accounts after today.
Should You Invest in ITC or ITC Hotels?
The question on many investors’ minds is whether to invest in ITC or wait for ITC Hotels’ listing. Analysts suggest that while ITC’s stock may face short-term volatility due to the demerger, its long-term prospects remain strong due to improved return ratios and cash flows post-demerger. For those looking at ITC Hotels, initial valuations suggest a promising start.
Expert Opinions
Market analysts have expressed mixed views on the impact of the demerger:
- Positive Outlook on ITC: Analysts believe that the separation will allow both entities to focus on their core businesses more effectively. They expect ITC’s medium-term fair value to range between ₹525 and ₹550.
- ITC Hotels Potential: Experts project that ITC Hotels could generate a net profit of approximately ₹546 crore in FY2025 due to its negligible debt and strong cash reserves.
Conclusion
As today unfolds with significant changes in share prices following the demerger of ITC Hotels from ITC Limited, investors are advised to stay informed about market movements and expert analyses. The upcoming weeks will be crucial as both companies establish their identities in the market.
Disclaimer
The information provided in this article is based on market analysis and does not constitute financial advice from the author or publication. Investors are encouraged to consult with certified financial advisors before making any investment decisions. The author and publication will not be liable for any losses incurred as a result of trading decisions based on this information.
