ITC Hotels Demerger: Key highlights and share price projections

The much-anticipated demerger of ITC Hotels took effect on January 1, 2025, marking a significant milestone for ITC Ltd. Here’s everything you need to know about the demerger, including share price estimates and key details:

1. A New Chapter for ITC Hotels

The strategic spin-off of ITC’s hotel business into an independent entity aims to unlock shareholder value and drive growth in the luxury hospitality sector. The record date for the demerger is set for January 6, 2025.

2. Shareholding Structure

Under the demerger terms, ITC shareholders will receive one share of ITC Hotels for every ten shares of ITC Ltd. Post-demerger, ITC Ltd will retain a 40% stake in the new entity, with the remaining 60% distributed proportionally among ITC shareholders.

3. Expected Share Price

The shares of ITC Hotels are projected to be listed by mid-February 2025. Based on industry valuation metrics, analysts at Nomura expect the share price to range between ₹200 and ₹300 per share, reflecting a positive growth outlook and market conditions.

4. Financial Backing

ITC Ltd has committed ₹1,500 crore to the new entity to ensure a debt-free start, supporting operational independence and future expansion plans.

5. Ambitious Growth Targets

ITC Hotels, currently operating 13,000+ rooms across 140 properties in 90 locations, aims to expand its portfolio to over 18,000 rooms across 200 properties by 2030. The focus will remain on a managed portfolio model to drive scalability and brand strength.

6. Industry Insights

India's luxury hospitality sector is experiencing robust growth, driven by limited supply, high demand, and improving margins. ITC Hotels is poised to leverage these trends, positioning itself among industry leaders like Indian Hotels and Chalet Hotels.

7. Strategic Benefits of the Demerger

By separating its hotel business, ITC Ltd can focus on its core operations while ITC Hotels gains the flexibility to tap into equity and debt markets for expansion. This move also strengthens ITC Ltd’s balance sheet and improves strategic agility.

8. Investor Outlook

The demerger offers shareholders potential value through listing gains and enhanced focus on growth. British American Tobacco, which holds a 15% stake in ITC Hotels post-demerger, may explore divestment, creating opportunities for further shareholder value consolidation.

The demerger of ITC Hotels represents a pivotal moment, unlocking opportunities for both entities to thrive independently while delivering substantial value to investors.

(Disclaimer: The views and opinions expressed are those of analysts and do not reflect any that of Bizz Buzz News.)