As a part of the demerger splitting ITC Hotels into an individual entity, ITC has allotted 125.11 Crores equity shares of ₹1 each to its shareholders, post a board meeting held on 11th January 2025. Consequently, ITC Hotels now ceases to be a subsidiary of the Company.
Understanding the Demerger Process and Timeline
- Shareholders will get one equity share of ITC Hotels for every 10 shares of ITC held.
- ITC will keep a 40% stake in the newly demerged entity.
- The remaining 60% will be held by existing shareholders proportionate to their stake in ITC, with post demerger equity capital of ₹208 crores.
- ITC Hotels is expected to be listed on the stock exchange around mid-February, 2025.
ITC Hotels Listing Date
ITCHL is expected to be listed in the second half of February 2025, upon submitting the relevant paperwork for the listing of its equity shares.
The shares will be frozen until the stock exchanges issue listing and trading permits.
Earlier on 16th December 2025, ITC had announced that ITC Hotels' shares will be listed within 60 days after receiving the NCLT ruling.
How will the ITC Hotels share price be determined?
On 6th January 2025, a special pre-open session was conducted to decide the price for the ITC Hotels share.
The price will be determined by the difference between the close price of ITC on 3rd January, and the open price of ITC discovered during the special pre-open session.
Why is ITC demerging its hotel business?
The ITC Hotels demerger will enable sharper focus and tailored hospitality strategies for the brand.
- Mature Hotels Business Ready for Growth: ITC's hotels segment has grown significantly and is now ready to thrive as an independent company. This move will allow it to grow faster while leveraging ITC’s brand and expertise.
- Focused Hotel Entity for Future Growth: Creating a standalone hotels company will allow sharper focus and strategies tailored to the hospitality market. This sets the stage for new opportunities and long-term value creation.
- Optimized Capital for Expansion: The new entity can access targeted investors and funding more easily. This alignment ensures growth strategies fit the hospitality sector's needs.
- Enhanced Value for ITC Shareholders: ITC shareholders will get a direct stake in the new hotels entity.
What it Means for the Indian Hospitality Industry
Presently, Indian Hotels are the largest hotel chain in India. With the demerger, ITC Hotels will become the second largest hotel chain with its revenue standing at ₹3,103 Crores.
| Indian Hotels | ITC Hotels | |
| Revenue | ₹ 6,769 Cr | ₹ 3,103 Cr |
| Occupancy Rate | 78% | 69% |
| Revenue per available room | ₹ 11,163 | ₹ 8,200 |
It is noteworthy how the Hospitality sector in India is booming, as demand is growing by 9%, while supply is at 6%. The remaining gap of 3% is what is boosting the industry’s growth. While the market size of hotels in India is estimated to be $24.6 Billion in 2024, it is forecasted to grow to a whopping $31 Billion by 2031!
Branded Hotel Chains and their Market Share in India
India’s hospitality sector is a competitive space. Leading players from the hotel industry by their market share percentage include:
- Marriott International: 14%
- Indian Hotels Company Limited (IHCL): 12%
- Radisson Hotels: 8%
- ITC Hotels: 7%
- Accor Group: 6%
- Hyatt Hotels: 5%
- Lemon Tree Hotels: 5%
ITC Ltd’s Financial Overview
As on 3rd January 2025, ITC Ltd. has a market capitalization of approximately ₹6.3 Trillion. The company’s Price-to-Earnings (P/E) ratio stands at 29.48. Over the last 7 days, the stock has moved up by 2.2%. Revenue is up for the last 3 quarters from ₹18.60K Crores to ₹21.35K Crores, with an average increase of 6.6% per quarter. Mutual Funds holdings for ITC Ltd have also increased from 11.92% to 12.75% during the Sep 2024 quarter.
About ITC Limited
ITC was originally incorporated as the Imperial Tobacco Company of India Limited in 1910. Today, ITC is one of India's leading private sector companies with businesses spanning:
- Fast Moving Consumer Goods
- Cigarettes
- Paperboards and Packaging
- Agri Business, and
- Information Technology
The Company recorded a gross revenue of ₹69,446 crores and Net Profit of ₹20,422 crores, as of FY 2023-24. Headquartered in Kolkata, ITC boasts of a vibrant portfolio of 25+ world-class Indian brands including Aashirvaad, Sunfeast, Yippee!, Bingo!, Sunbean, Fiama, Engage, Vivel, Savlon, Classmate and more!
Hotel Brands under ITC
Over the years, ITC has introduced a diverse portfolio of hotel brands setting benchmarks in the hospitality industry.
1. ITC Hotels – ITC Maurya (New Delhi), ITC Grand Chola (Chennai), ITC Gardenia (Bengaluru)
2. WelcomHotels - Welcomhotel Bengaluru, Welcomhotel Amritsar
3. Fortune Hotels - Fortune Select Exotica (Navi Mumbai), Fortune Park Panchwati (Kolkata)
4. WelcomHeritage Hotels - WelcomHeritage Shivavilas Palace (Karnataka), WelcomHeritage Mandir Palace (Jaisalmer)
5. Momentos by ITC Hotels - Momentos Udaipur (Upcoming), Momentos Goa
6. Storii by ITC Hotels - Storii Coorg, Storii Goa
Conclusion
ITC’s hotel demerger is a significant move to enable focused growth for the brand. For investors, this development presents potential opportunities but also calls for careful evaluation. It’s crucial to assess the performance of both ITC and ITC hotels post-demerger before making investment decisions.
Disclaimer
This blog is for general/educational information purposes and is no way to be considered as advice, or recommendation for investment or otherwise.
Investment in securities market are subject to market risk, read all the documents carefully before investing. The securities quoted are exemplary and not to be considered as any kind of advice or recommendation. The past performance of the stocks are not necessarily indicative of future performance. INDmoney Private Limited 616, Level 6, Suncity Success Tower, Sector 65, Gurugram, 122005, SEBI Stock Broking Registration No: INZ000305337, Trading and Clearing Member of NSE (90267, M70042) and BSE, BSE StarMF (6779), SEBI Depository Participant Reg. No. IN-DP-690-2022, Depository Participant ID: CDSL 12095500.
Source:
ITC Investor relations - PPT, Screener.in, Business Standard, Hotelivate, Screener, Company Filings
Frequently Asked Questions about ITC Demerger
What is a demerger? How does a demerger work for shareholders?
A demerger happens when a company splits into two or more separate entities of its own. This is mostly done to:
- focus on the core business
- streamline operations
- unlock more value
When a demerger takes place, the shareholders of the original company receive shares in the newly formed companies, proportionately to their holdings in the parent company.
How many shares of ITC Hotels will I get?
If you are a ITC Ltd share holder, then you will receive one equity share of ITC Hotels for every 10 shares of ITC that you own.
What is the share split of ITC demerger?
ITC shareholders will receive 1 equity share of ITC Hotels for every 10 shares of ITC held. ITC will retain a 40% stake in the newly demerged entity, while the remaining 60% will be proportionately distributed among existing shareholders based on their stake in ITC.
What is the timeline for ITC demerger?
The timeline for the ITC demerger will be as follows:
- 6th January 2025: A special pre-open session will be held to determine the price for the ITC Hotels shares.
- Shareholders will get one equity share of ITC Hotels for every 10 shares of ITC held.
- February 2025: ITC Hotels is expected to be listed on the stock exchange.
It is advised for all investors to stay updated about the latest happenings for ITC Hotels and ITC Ltd before making any investment decision.
What will happen to ITC shares after the demerger?
Post the demerger on 6th January 2025, ITC shares are now trading ex-hotels, closing 8.09% lower on the NSE at ₹442.65.
Alongside, ITC shareholders will be receiving 1 ITC hotel share for every 10 ITC shares held by them post listing.When will I receive my ITC Hotels shares?
ITC Hotels are expected to be listed on NSE and BSE somewhere in mid-February 2025. Shareholders will receive the ITC Hotels shares post listing.
Is a demerger good for shareholders?
Absolutely, a demerger is a win-win for shareholders of both parties involved. The ITC Hotels demerger brings with it a focused approach for the management to grow the hotels business specifically. Given how the hospitality sector is booming in India with a forecasted growth of $31 Billion by 2031, the demerger could potentially bring with it significant returns in the long run. Investors are recommended to do thorough research and constantly monitor the market before taking any investment decision.