ITC shares rise over 2% as NCLT approves demerger of hotel business

Shares of ITC climbed 2.2% to Rs 514.8 in Monday's intraday trade on the BSE after receiving approval from the National Company Law Tribunal (NCLT) for the demerger of its hotel business.

The approval came from the Kolkata bench of the NCLT on Friday, as per an exchange filing. The demerger scheme will be effective on the first day of the following month after filing a certified copy of the NCLT order with the Registrar of Companies, West Bengal, and fulfilling other conditions & matters, ITC said. "The company will advise the effective date to the stock exchanges in due course."

The company announced plans to demerge its hotel business in August 2023 into a separate entity. Under this demerger scheme, ITC will maintain 40% ownership of ITC Hotels, with ITC shareholders acquiring the remaining 60% in proportion to their stake in the parent entity.



Shareholders had already approved the demerger in June, with the resolution passing with the requisite majority.

The Competition Commission of India (CCI) cleared the proposal in May. ITC has emphasized that its hotel business has matured and is now ready to chart its own growth path as a separate entity with a focused business approach and optimal capital structure.

At 10:11 am, the scrip was trading 2.13% higher at Rs 514.15 on BSE. The stock is up 10% year-to-date and has surged 54% over the past two years. ITC's market capitalization currently stands at Rs 6,43,390 crore.

In Q1 FY25, ITC reported a marginal increase in standalone net profit at Rs 4,917.45 crore compared to Rs 4,902.74 crore in the same period last year. Standalone revenue from operations rose 7% to Rs 18,219.74 crore, up from Rs 16,995.49 crore in Q1 FY24.

Sequentially, the company's PAT was down 2% from Rs 5,020.20 crore in Q4 FY24, while revenue increased 2.6% from Rs 17,752.87 crore in the previous quarter.

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