Wed Jan 01 16:24:01 UTC 2025: ## ITC Hotels Demerger Takes Effect; Shares Trade Higher

**MUMBAI, INDIA – January 3, 2024** – Shares of ITC Ltd. saw a slight increase in Wednesday’s trading following the effective demerger of its hotel subsidiary, ITC Hotels. The record date for the demerger is January 6th, when ITC shareholders will receive one share of ITC Hotels for every ten ITC shares held.

Analysts predict a price discovery of Rs 150-175 per share for ITC Hotels in the special pre-open session on the record date. While opinions vary, the overall sentiment towards ITC shares remains neutral to positive. ITC will retain a 40% stake in ITC Hotels, with the remaining 60% distributed to shareholders.

Systematix Shares and Stocks (India) estimates that the demerger will boost ITC’s return on capital employed (ROCE) from 40% to 43%. They project ITC Hotels will commence operations with Rs 1,500 crore in cash and no debt, allocating 8-10% of sales towards renovations and new projects. ITC Hotels is India’s second-largest hotel chain with 140 properties. Systematix values ITC Hotels at Rs 150 per share based on a FY26E EV/EBITDA multiple of 25 times, comparable to industry peers. They anticipate a Rs 5 per share adjustment to ITC’s stock price on the record date and maintain a “HOLD” rating with a target price of Rs 500.

Other firms offer varying assessments. Antique Stock Broking maintains a “Buy” rating with a target price of Rs 563, while Nuvama estimates an ITC share price adjustment of Rs 18-25 per share, factoring in the 40% stake and a holding discount. Analysts at Anand Rathi highlight ITC’s strong performance in packaged foods and personal care, along with a robust balance sheet, as contributing to its positive outlook.

ITC shares closed at Rs 484.95 on Wednesday, up 0.27%.

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