ITC Hotels demerger: Record date, demerger ratio, price target and other details to know
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Demerger Decoded
The long-awaited demerger of Kolkata-based diversified conglomerate ITC’s hotel business will come into effect today. The tobacco-to-hotel conglomerate has fixed January 6 as the record date for the spin off of its hotels business. According to the demerger scheme, ITC Hotels will now be a separately listed entity from its parent ITC Ltd. Here are some details of the demerger:
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What’s the record day for ITC Hotels demerger?
The record date for the demerger of ITC Hotels is set for January 6. ITC shareholders whose names will appear in the company’s books as on January 6 record date, will get one share of ITC Hotels for every 10 ITC shares held.
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ITC Hotels demerger ratio
The demerger ratio of ITC Hotels is 1:10, which means shareholders will receive one share in the new hotel entity, ITC Hotels, for every 10 they currently hold in the parent company, ITC Ltd.
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Post merger shareholding structure for ITC investors
Under this demerger scheme, ITC will maintain a 40% ownership of ITC Hotels, with ITC shareholders acquiring the remaining 60% in proportion to their stake in the parent entity.
Overall, existing ITC shareholders will hold 100% of ITC Hotels, which is about 60% directly and balance of about 40% through their shareholding in ITC.
Overall, existing ITC shareholders will hold 100% of ITC Hotels, which is about 60% directly and balance of about 40% through their shareholding in ITC.
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ITC Hotels demerger cash infusion
ITC said it will transfer cash and cash equivalent worth Rs 1,500 crore to ITC Hotels for growth and contingency requirements.
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Demerger price of ITC Hotels
The BSE and NSE stock exchanges will conduct a special trading session on January 6, the record date, to determine the fair value of ITC Hotels shares. The shares are expected to be listed within 60 days following the receipt of the NCLT order on December 16.
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Share price estimates for ITC Hotels
The average EV/EBITDA multiple of ITC Hotels’ industry peers, like Indian Hotels and EIH Ltd, is 25.0x. Assuming that ITC Hotels will list at an EV/EBITDA multiple of 20.0x - 30.0x, the share price of ITC Hotels Ltd is expected to list in the range of Rs 113 to Rs 170 per share, according to estimates by SBI Securities.
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What analysts say on ITC Hotels demerger
ITC remains a consensus buy on Dalal Street, with only 2 out of 35 analysts covering the stock giving it sell ratings, according to Trendlyne data.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)