ITC Hotels Demerger: Price Discovery Begins

ITC Ltd’s stock dropped by 3% in today’s special pre-open session, as the market began the price discovery for ITC Hotels following the demerger announcement. ITC will hold a 40% stake in ITC Hotels, while the remaining 60% will be distributed among ITC shareholders. Shareholders will receive one ITC Hotels share for every 10 ITC shares held.
Analysts estimate ITC Hotels’ stock price to range between Rs 150 and Rs 175, based on expected valuations. The opening price discovered in the pre-open session will determine ITC Hotels’ stock price, which will remain fixed until its listing in February.
ITC Hotels will initially have Rs 1,500 crore in cash, with no debt, and plans to invest in renovations and new projects. This demerger is expected to improve ITC’s return on capital employed (ROCE), with a forecasted increase from 40% to 43%.