ITC Hotels demerger: ITC special pre-open session underway

ITC Ltd fell 3 per cent in Monday's special pre-open session, as the price discovery process was underway amid the demerger of ITC's hotels business. The eligible shareholders of ITC would be getting one share of ITC Hotels for every 10 shares they held in ITC.  In the special pre-open session, the ITC stock last traded at Rs 469, down 2.69 per cent over its previous close of Rs 482. The session would conclude at 9.45 am and normal trading in ITC shares will resume at 10 am.

ITC Hotels' price will be determined by the difference between ITC's closing price on Friday and the opening price discovered during the special pre-open session (SPOS) today. This price for ITC Hotels will stay fixed in all NSE and BSE indices, until the stock's listing in February. 

Till then, ITC Hotels would have a dummy ticker on indices. No buying or selling would be allowed on ITC Hotels until the listing.

ITC Hotels will be removed from all NSE and BSE indices at its last traded price, effective three business days after the opening of ITC Hotels' listing. If the stock hits circuit limits, the exclusion will be delayed by two trading days for each circuit limit hit.

Analysts largely see ITC Hotels to see a price discovery of Rs 150-175 per share. They have neutral to positive view on ITC shares. ITC will directly hold 40 per cent stake in ITC Hotels while the rest 60 per cent stake will be held by ITC shareholders.

"ITC Hotels is India's 2nd-largest hotels entity with 140 properties (vs 232/23/112 for Indian Hotels, EIH, Lemon Tree). As per our proforma P&L, we estimate ITC Hotels' stock value at Rs 150 per share based on FY26E EV/Ebitda of 25 times," Systematix said.

Systematix said that the hotels business makes up 4 per cent of ITC revenues, 3 per cent of its EBIT but 10 per cent of capital employed. It believes the demerger should improve ITC's ROCE from 40 per cent to 43 per cent. It noted that ITC Hotels will start with cash of Rs 1,500 crore (ITC at Rs 5,730 crore) and zero debt. It will invest 8-10 per cent of sales towards renovations, ongoing projects, new projects.

According to Nuvama's FMCG team, led by Abneesh Roy, the adjustment is expected to be Rs 18 per share. "In addition, based on discussions with multiple market participants, we anticipate that the initial market price for ITC Hotels shares will range between Rs 150-175 per share," Nuvama said.