ITC Hotels Demerger Latest Information
On 29 January 2025, shares of ITC Hotels (ITCHL) were listed on the BSE at an opening price of ₹188. However, the shares hit a lower circuit of 5% within minutes as several investors sought to exit the hotel business. Under the demerger, 125.11 crore equity shares of ITC Hotels were allotted to ITC shareholders at a rate of ₹1 per share.
ITC Hotels Demerger: Process and Timeline
- Listing Date: Shares of ITC Hotels were listed on NSE and BSE on 29 January 2025.
- Share Ratio: 1 ITC Hotels share for every 10 ITC shares.
- ITC’s stake: ITC has retained a 40% stake in the new hotel business, while the remaining 60% is held by existing shareholders.
- Equity capital: After the demerger, the equity capital of ITC Hotels was ₹208 crore.
How was the ITC Hotels share price determined?
A special pre-open session was held on January 6, 2025, in which the ITC Hotels share price was determined. The price was determined based on the difference between the closing price of ITC on January 3 and the opening price of ITC in the pre-open session.
Reason behind ITC Hotels demerger
ITC decided to make the hotel business an independent entity for several strategic reasons:
- Independent growth potential: ITC Hotels has already become a stable business and can grow more rapidly independently.
- More focused strategy: Becoming a separate entity will make it possible for ITC Hotels to focus exclusively on the hotel industry.
- Better availability of capital: Having a separate entity can attract new investors and raise more financial resources for growth.
- More value for shareholders: ITC shareholders will now have the opportunity to invest directly in the hotel business.
Impact on Indian hotel industry
ITC Hotels has now become the second largest hotel chain in India. Currently, the position of the top companies in the Indian hotel industry is as follows:
| Hotel Chain | Revenue (₹ Crore) | Average Occupancy Rate (%) | Revenue Per Room (₹) |
|---|
| Indian Hotels | 6,769 | 78% | 11,163 |
| ITC Hotels | 3,103 | 69% | 8,200 |
India’s hotel market is expected to grow from $24.6 billion in 2024 to $31 billion by 2031. This is being made possible due to demand growth of 9% and supply growth of 6%.
Market share of major hotel brands in India
- Marriott International: 14%
- Indian Hotels (IHCL): 12%
- Radisson Hotels: 8%
- ITC Hotels: 7%
- Accor Group: 6%
- Hyatt Hotels: 5%
- Lemon Tree Hotels: 5%
Financial performance of ITC Limited
- Market capitalisation: ₹6.3 trillion (as of 3 January 2025)
- P/E ratio: 29.48
- Revenue growth: ITC’s revenue has grown from ₹18,600 crore to ₹21,350 crore in the last three quarters.
- Mutual Fund Holding: Increased from 11.92% to 12.75% in September 2024.
ITC Limited: Introduction
Established in 1910, ITC Limited is one of the leading private companies in India. Its business areas include:
- FMCG products
- Cigarettes
- Packaging and Paperboard
- Agribusiness
- Information Technology
Key Brands of ITC Hotels
ITC Hotels has developed a strong portfolio over the years:
- ITC Hotels: ITC Maurya (Delhi), ITC Grand Chola (Chennai), ITC Gardenia (Bengaluru)
- WelcomeHotels: WelcomHotel Amritsar, WelcomHotel Bengaluru
- Fortune Hotels: Fortune Select Exotica (Navi Mumbai), Fortune Park Panchavati (Kolkata)
- WelcomeHeritage Hotels: WelcomHeritage Shivvilas Palace (Karnataka), WelcomHeritage Mandir Palace (Jaisalmer)
- Momentos by ITC Hotels: Momentos Udaipur (upcoming), Momentos Goa
- Story by ITC Hotels: Story Coorg, Story Goa
Conclusion
The divestment of ITC Hotels is an important strategic move, which will enable the hotel business to grow independently This can be an exciting opportunity for investors, but it is necessary to analyze the market situation and the company’s performance before investing.
Frequently Asked Questions (FAQs)
1. What is a split and what is its impact on shareholders?
A split occurs when a company divides its business into two or more separate units. This can simplify operations and help companies focus on their core business.
2. How many shares of ITC Hotels will be available?
For every 10 shares of ITC, one ITC Hotels share will be received.
3. How will the shares be distributed in the ITC split?
ITC will retain a 40% stake, while the remaining 60% will go to existing ITC shareholders in proportion to their stake.
4. When will ITC Hotels shares be listed?
ITC Hotels shares are likely to be listed on NSE and BSE by mid-February 2025.
5. Is the demerger beneficial for shareholders?
Yes, the decision will help in adopting a more focused strategy for the hotel business, which may benefit long-term investors.
Advice for investors
Given the demerger of ITC Hotels, investors are advised to keep an eye on the future performance of the company and the prospects of the hotel industry.
Disclaimer
This blog is for general/educational information purposes and should not be construed as advice or recommendation for investment or otherwise in any manner.
Investment in securities market is subject to market risk, read all documents carefully before investing. The securities quoted are exemplary and should not be construed as advice or recommendation of any kind. Past performance of stocks is not necessarily indicative of future performance.
Read Also: ITC Hotels stock rises, gains 3.03% to Rs 201.90
Surendra Bareth is a versatile actor and assistant director with a Bachelor’s degree from Guru Ghasidas University. He has made remarkable contributions to Hindi and Chhattisgarhi cinema, as well as television, excelling in both acting and direction.
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