ITC shares tank 2.5% as British American Tobacco mulls stake sale

Shares of ITC Ltd plunged as much as 2.49%  on Tuesday to hit an intraday low of ₹399.30 apiece on the BSE, as British American Tobacco Plc is reportedly planning to sell a 'small part of its' stake in the FMCG major by the end of this week. According to reports, London-listed BAT, ITC's largest shareholder with a 29.03% stake, is in talks with Bank of America Corp and Citigroup, for a potential divestment of around $2-$3 billion in ITC stock via a block deal. The deal is likely to be done at a discount to the market price.

Reacting to the development, the scrip opened gap-down at ₹405.85, lower by 0.86% against the previous closing price of ₹409.40. At 10:51 am, the FMCG major's share price was trading 1.71% lower at ₹402.40. This was in line with the broader BSE Sensex, which was down 74.11 points at 73,420.53.

The company's market capitalisation stood at ₹5,02,691.21 crore with more than 11.45 lakh shares exchanging hands on the BSE as against the two-week average of 6.08 lakh shares. The company hit a 52-week high of ₹499.60 on July 24 last year, and a 52-week low of ₹369.70 on March 17 this year. In the year-to-date period, the stock of the tobacco manufacturer has slumped 13.83%. 

Last month, British tobacco giant had said that it would pursue all opportunities to enhance balance sheet flexibility including regular review of its stake in ITC. "We continue to pursue all opportunities to enhance balance sheet flexibility and, as part of this, we regularly review our stake in ITC. We recognise that we have a significant shareholding which offers us the opportunity to release and reallocate some capital," BAT said.

"Our shareholding in ITC has existed in one way or another since the early 1900s and is subject to numerous share capital changes and regulatory restrictions. 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 and will update you at the earliest opportunity," it added.

In the October to December quarter of FY24, the net profit of ITC grew 6.5% to ₹5,335 crore, which was in line with the street expectations. The company’s revenue from operations surged by 2% to ₹19,485 crore as against ₹19,021 crore in the corresponding period of the previous year.

The hotel business was the biggest contributor, followed by FMCG, while paperboard and agri remained under severe pressure causing a significant drag in overall profitability.

The revenue from FMCG cigarette business rose 2.5% to ₹8,295 crore as compared with ₹8,086 crore in the year-ago period, contributing around 45% of the revenue this quarter. Businesses in FMCG, including packaged food and personal care products, reported 7.6% growth in revenue to ₹5,209 crore despite subdued demand conditions. The company’s revenue from the hotel business grew 18% YoY to ₹842 crore.