ITC Ltd. has taken a significant step in reshaping its hospitality business by allotting 125.11 crore equity shares of ITC Hotels to its shareholders. This development finalizes the demerger of ITC Hotels as an independent entity and is part of the conglomerate’s strategy to unlock value and focus on a sharper capital allocation approach.

The decision, made during a Board meeting on January 11, 2025, follows a scheme of arrangement under Sections 230 to 232 of the Companies Act, 2013. As per ITC’s exchange filing, “The Board of Directors of ITCHL...has allotted 125,11,71,040 equity shares of INR 1 each to the shareholders of the company as of the record date, January 6, 2025.”

Strategic Implications of the Demerger

Effective January 11, 2025, ITC Hotels ceased to be a subsidiary of ITC Ltd., with plans to list the newly issued shares after securing regulatory approvals. Until then, these shares will remain frozen. ITC will retain 40 percent of the hotel business, while the remaining 60 percent will be distributed among existing ITC shareholders.

ITC’s demerger is expected to attract investors and strategic partners aligned with the hospitality sector's specific needs. The move also enhances shareholder value by providing a direct stake in ITC Hotels, which will now benefit from independent market-driven valuation.

India’s Second-Largest Hotel Chain

With a portfolio of 140 properties, ITC Hotels has emerged as India’s second-largest hotel chain. Its offerings range from iconic luxury hotels such as ITC Grand Bharat to premium brands like WelcomHotel, catering to diverse travelers across major cities and tourist destinations.

The company’s transition aligns with ITC’s “asset-right” strategy, focusing on optimized capital allocation within its hospitality arm. This demerger is expected to position ITC Hotels for greater growth, providing opportunities for strategic collaborations and enhancing its market presence.

Broader Impact on ITC

Beyond hospitality, ITC Ltd. remains a diversified conglomerate with a strong presence in FMCG, packaging, and paperboards. Its brands, including Aashirvaad, Sunfeast, and Classmate, continue to dominate their respective markets, demonstrating ITC’s leadership across multiple sectors.

The market anticipates ITC Hotels’ stock to be listed on exchanges by mid-February, pending approvals, setting the stage for a significant milestone in the Indian hospitality industry.