ITC shares slip 4% after largest shareholder BAT says it is working to monetise stake

ITC Ltd shares on Thursday slipped after British American Tobacco (BAT) said it could sell some of its stake in India's cigarette-to-hotels conglomerate. BAT is largest shareholder in ITC.

ITC fell 5.38 per cent to hit an intraday low of Rs 414 against a previous close of Rs 431.90. It eventually settled 4.04 per cent lower at Rs 414.45. BAT said its stake in the domestic FMCG giant decreased from 29.19 per cent in 2022 to 29.02 per cent in 2023.

"We continue to pursue all opportunities to enhance balance sheet flexibility and, as part of this, we regularly review our stake in ITC. We recognise that we have a significant shareholding which offers us the opportunity to release and reallocate some capital," BAT said in a release.

"We have been actively working for some time on completing the regulatory process required to give us the flexibility to monetise some of our shareholding and will update you at the earliest opportunity," it added.

BAT also stated that its share of post-tax results of associates and joint ventures increased from £442 million to £585 million which largely relates to the performance of the Group’s main associate, ITC Limited (ITC) in India. The foreign firm further mentioned that its share of ITC's post-tax results was 19.8 per cent higher at £616 million (2022: £514 million).

"The movements are largely due to the economic recovery in India in 2023 from Covid-19 which led to difficult trading conditions in 2022, more than offsetting a translational foreign exchange headwind. On 24 July 2023, ITC announced a proposed demerger of its hotels business under a scheme of arrangement by which 60 per cent of the newly incorporated entity would be held directly by ITC's shareholders proportionate to their shareholding in ITC," it added.

Back home, ITC's third-quarter profit rose 10.8 per cent, to Rs 5,572 crore, in the three months ended December 31, from a year earlier. Revenue from operations rose 2 per cent, to Rs 17,665 crore, with the cigarettes business growing 3.6 per cent.

ITC's hotels business (set to demerge into a separate entity) reported an 18 per cent jump in revenue in the quarter, on the back of a strong revival in domestic tourism and heightened demand from corporate bookings.

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