In a landmark move, ITC Ltd has begun its long-awaited demerger of ITC Hotels, with BSE and NSE conducting special pre-open trading sessions today to facilitate price discovery for the hotel business. This strategic restructuring allows ITC Hotels to operate independently, focusing exclusively on hospitality.

During the session, ITC Hotels' share price will be computed using ITC Ltd's closing and adjusted prices, incorporating a 1:10 demerger ratio. Analysts predict the shares to list between ₹150 and ₹200, with some forecasts suggesting a range of ₹200 to ₹300 based on valuations and growth prospects.

As of today, ITC Ltd's 36 lakh shareholders will receive one ITC Hotels share for every 10 ITC shares held. While ITC Hotels shares won’t officially list yet, a dummy ticker will represent the stock on indices like Nifty and Sensex until formal listing in a few weeks.

ITC retains a 40% stake in the demerged entity, with the remaining 60% distributed among shareholders. Analysts from Ambit Capital and Nomura see this as a step toward value unlocking, with ITC Hotels poised to capitalize on India's luxury hospitality sector. Asset-light models and a pure-play focus will drive future growth and profitability.

ITC’s stock price is expected to adjust downward by ₹22–₹25 due to the demerger. Experts believe this could be a temporary dip, providing an opportunity for retail investors to accumulate shares of ITC Hotels. Meanwhile, ITC Ltd aims to sharpen its focus on its high-margin FMCG business, which has seen substantial EBITDA growth.

Nomura analyst Mihir P Shah remarked, "The demerger unlocks significant value, allowing ITC Hotels to access equity and debt markets for future growth while benefiting from India's luxury hospitality sector’s re-rating."

While ITC shares ended last week at ₹482 on the BSE, underperforming over the past year, this demerger sets the stage for a potential re-rating as ITC pivots toward a leaner business model with enhanced focus on profitability.

(Disclaimer: The views and opinions expressed by experts are their own and do not represent the views of Hospitality News India.)