ITC Ltd.'s share price will be in focus on Monday as the stock adjusts on the record date that will determine the eligible shareholders who will receive shares in ITC Hotels Ltd., the newly separated entity.
After the demerger became effective on Jan. 1, as per the company's earlier disclosures to the stock exchanges, the ITC stock will go ex-demerger on Jan. 6. This means that investors who hold shares of the parent company in their demat accounts as of Monday will receive shares of ITC Hotels.
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Under the terms of the demerger, ITC shareholders will receive one share of ITC Hotels for every 10 shares of the parent they hold.
A special trading session will take place between 9:00 a.m. and 10:00 a.m. to determine the share price of ITC, after the adjustment for the demerger. Investors should note that the price of ITC shares will adjust to reflect the intrinsic value of ITC Hotels, and the shares of ITC Hotels will be credited to the demat accounts of eligible shareholders after this date.
Since the shares of ITC Hotels are yet to be transferred to eligible ITC shareholders and exchanges' permission is pending, the ITC Hotel stock will remain in benchmark indices Nifty 50 and BSE Sensex as a dormant stock.
ITC shares will continue to trade in the normal market after adjusting for the demerger of the hotels business arm.
The demerger has been structured as part of ITC's strategy to separate its hotels business, with ITC Hotels poised to become India's second-largest hotel chain with a portfolio of 140 hotels and 12,965 keys.
Additionally, the company has a robust expansion pipeline, which will bring the total number of properties to 186, offering a total of 17,265 keys by March 2030.
In the last four days—since the demerger came into effect—the stock has declined 0.4%. On Friday, which was the final day to acquire ITC shares, the scrip closed 1.5% lower at Rs 481.6.
It has risen 1.6% in the last 12 months.
Of the 38 analysts tracking the company, 34 maintain a 'buy' rating, three recommend a 'hold' and two suggest 'sell', according to Bloomberg data. The average 12-month analysts' consensus price target of Rs 540 implies an upside of 12%.
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