ITC share price gained over 2.5% and hit a fresh 52-week high on Wednesday (July 5) on the news that the process for demerging the hotel business is underway. "ITC is exploring alternate structures for hotel business," said a CNBC-TV18 report citing sources.
ITC shares were up 2.15% at Rs 475.95 per share at 3:20 pm IST today. In the last one year, the returns from the stock have gained almost 65%, while the stock’s year-to-date (YTD) performance is up almost 43%.
The merger news comes at a time when the hospitality sector is witnessing an unprecedented boom despite elevated room rates. Earlier, ITC chairman and managing director Sanjiv Puri had said that the demerger of the firm's hotel business is “very much on the table” after the sector recovered post the Covid-19 pandemic.
The hotel business has contributed less than 5% to ITC's revenues over the last decade. Meanwhile, it has accounted for over 20% of the company's capex in the past.
In the quarter ended March 2023, ITC reported a 21.4% on-year growth in standalone net profit at Rs 5,086.9 crore. The company’s revenue from operations (barring excise duty) also increased 5.6% to Rs 16,398 crore, exceeding estimates of various analysts. Hotels business revenue for the quarter doubled to Rs 781 crore.
Last month the company announced that it has acquired 857 compulsorily convertible preference shares of Rs 10/- each of Mother Sparsh at a consideration of 11.54 crores (approx.). With the aforesaid acquisition, the company’s shareholding in Mother Sparsh aggregates 26.50% of its share capital on a fully diluted basis.
On May 30, the company declared a final dividend of Rs 6.75 per equity share and a special dividend of Rs 2.75 per share of Re 1 each for the quarter ended March 2023. The FMCG major is the largest cigarette manufacturer and seller in India and was established in 1910.
The Indian equity market opened on a flat note today. At 3:30 pm IST Sensex was down 0.050% at 65,446.04 points, while Nifty w slightly up at 19,398.50 points.