(Reuters) -Indian foods-to-tobacco group ITC’s market value was adjusted lower by about 5%, or 325 billion rupees ($3.8 billion), in a special trading session on Monday to account for the spin-off of the conglomerate’s hotels business.
ITC’s shares settled at 455.60 rupees at the end of the hour-long pre-open trading session, compared with its unadjusted close of 481.60 rupees on Friday.
The local stock exchanges will deem the stock’s adjusted close on Friday to be 455.60 rupees, which will give ITC a market capitalisation of $66.4 billion.
Compared with the adjusted close, ITC’s stock was down 1.2% at 450.2 rupees, as of 12:58 p.m. IST.
The ITC Hotels spin-off was effective Jan. 1, with ITC holding a 40% stake and the rest open to public shareholders.
ITC shareholders will get one ITC Hotels share for every 10 ITC shares held. The price values ITC Hotels at 260 rupees per share, giving it a market value of $6.29 billion, based on Reuters calculations.
ITC Hotels’ shares are expected to start trading in February.
Analysts have said the spin-off will unlock value for ITC shareholders, highlighting that the capital-intensive hotels business – among ITC’s smallest by revenue – has subdued returns for the overall company.
The hotels business reported a roughly 16% rise in revenue to 29.9 billion rupees for the year ended March 2024, but accounted for just 4% of ITC’s overall revenue.
Analysts at Centrum expect ITC Hotels to record a compounded annual revenue growth rate of 13.8% from fiscal 2024 to 2027 due to strong domestic demand, and expect a 35% earnings margin before interest, taxes, depreciation and amortization in that period.
($1 = 85.8220 Indian rupees)
(Reporting by Nandan Mandayam in Bengaluru; Editing by Savio D’Souza and Sherry Jacob-Phillips)
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