ITC Hotels Demerger Expected Soon —What You Should Know

The effective date, as per the scheme of the arrangement, is the first day of the subsequent month after the company formally acknowledges that all conditions and approval for the demerger has been fulfilled and files with the Registrar of Companies. The company is currently awaiting certified copy from the NCLT so that it can file with the ROC.

Thereafter, the board of the two companies will decide on the record date for the demerger, i.e. the date of determining the eligibility of the shareholders to get shares of ITC Hotels.

As per the scheme of arrangement, the new resulting company, ITC Hotels Ltd., will have an equity of 207.84 crore shares of Rs 1 face value i.e. equity capital of Rs 207.84 crore.

The hotel arm will unlock value for the ITC's largest shareholder BAT and minority shareholders. ITC will own 40% of the listed hotel arm. BAT which will owns 15.32% in the hotel arm will exit the company at an appropriate time post listing of the hotel arm.

According to disclosures made by ITC, assets of ITC Hotels account for 13.3% of the total ITC assets and networth is at Rs 14.4% of the parent.

ITC Hotels is estimated to post a profit of Rs 537 crore for the financial year 2024-25 on an revenue of RS 3381 crore. That translates into an EPS of Rs 2.6 and at a similar price to earnings to peer of 45-times, the hotel could be priced around Rs 100-120 apiece. With the company has a market value of close to Rs 25,000 crore, that's little over 4% of ITC's market cap, becoming the second largest hospitality player after Indian Hotels.

As part of the asset light strategy the company added 30 hotels to its portfolio in the last 24 months including nine hotels. It signed 15 new properties in the first half of current financial year and plans to open 28 hotels by September 2026.

ITC is part of the key benchmark indices and hence the demerger will follow a similar process seen during the demerger of Reliance and Jio Financial Services. ITC has a 4.16% weightage in the Nifty 50 Index.

On the record date ITC shares will undergo price adjustment, this will be similar to Reliance and Jio Financial adjustments. ITC Hotels is expected to continue within the indices till its listing. While ITC will be trading at adjusted price, ITC Hotels' price will remain static till it gets listed and starts trading.

ITC Hotels will move out of the indices only after the indices as per the exchange norms.