MUMBAI: ITC stock fell 4% on Thursday, the most among sensex constituents, after the Kolkata-headquartered conglomerate’s single-largest shareholder British American Tobacco said it was looking at ways to dilute its stake in the company. This was the second time in the last one month that BAT – one of the largest cigarette makers in the world – said it was willing to cut its holding in ITC, which has a substantial presence in the country’s cigarettes, luxury hotels, foods and FMCG sectors.
Industry sources said that the market may have overreacted to the news about BAT’s intentions about its holding in ITC, which currently stands at a little over 29%. “Informally, BAT, over several months, has communicated that it may sell up to 4% in ITC, but would like to retain at least 25% in the company now,” said a source.
At Thursday’s close on BSE, ITC – with a market capitalisation of Rs 5.2 lakh crore – is the 10th most valued company in the country. BAT’s stake in ITC is currently valued at about Rs 1.5 lakh crore, translating to a little over $18 billion. A 4% stake dilution could fetch nearly $2.5 billion for the UK-based company.
Although BAT has not sold any shares of ITC through the open market or block deals, its shareholding in ITC in the last four years has come down by about 0.42% mainly because of issuance of stock options by the Indian company, BSE data showed.
“(We) continue to pursue all opportunities to enhance balance sheet flexibility and, as part of this, we regularly review our stake in ITC,” BAT CEO Tadeu Marroco said on Thursday while releasing its 2023 results. “We recognise that we have a significant shareholding which offers us the opportunity to release and reallocate some capital. We have been actively working for some time on completing the regulatory process required to give us the flexibility to monetise some of our shareholding (in ITC),” Marroco was quoted in BAT’s results release.
Industry sources said that the market may have overreacted to the news about BAT’s intentions about its holding in ITC, which currently stands at a little over 29%. “Informally, BAT, over several months, has communicated that it may sell up to 4% in ITC, but would like to retain at least 25% in the company now,” said a source.
At Thursday’s close on BSE, ITC – with a market capitalisation of Rs 5.2 lakh crore – is the 10th most valued company in the country. BAT’s stake in ITC is currently valued at about Rs 1.5 lakh crore, translating to a little over $18 billion. A 4% stake dilution could fetch nearly $2.5 billion for the UK-based company.
Although BAT has not sold any shares of ITC through the open market or block deals, its shareholding in ITC in the last four years has come down by about 0.42% mainly because of issuance of stock options by the Indian company, BSE data showed.
“(We) continue to pursue all opportunities to enhance balance sheet flexibility and, as part of this, we regularly review our stake in ITC,” BAT CEO Tadeu Marroco said on Thursday while releasing its 2023 results. “We recognise that we have a significant shareholding which offers us the opportunity to release and reallocate some capital. We have been actively working for some time on completing the regulatory process required to give us the flexibility to monetise some of our shareholding (in ITC),” Marroco was quoted in BAT’s results release.
