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Shares of ITC Limited are gaining investor interest as the company prepares to demerge its hotel business. The demerger will take effect on January 1, 2025, with the record date set for January 6, 2025. This move will make ITC Hotels the second-largest hotel chain in India, with 140 hotels and 12,965 rooms. Over the past two years, ITC has added 28 hotels with 1,642 rooms. Additionally, ITC Hotels plans to open 46 more hotels with 4,300 rooms by March 2030. Thus, this expansion will bring the total to 186 hotels and 17,265 rooms. ITC Hotels operates under the brand names Welcomhotel, Mementos, Storii, Fortune, and WelcomHeritage.
Post-Demerger Trading
After the record date, ITC Hotels’ stock will remain part of the indices for the first three days of trading. During this period, the stock will be priced based on the difference between ITC’s closing price before the demerger and the price discovered during the pre-open session. Furthermore, shareholders will continue to see ITC Hotels in the indices during this time.
Important Dates:
- Pre-open session for price discovery: Jan 6, 2025, from 9:00 AM to 9:45 AM.
- Normal trading resumes: 10:00 AM onwards on Jan 6, 2025.
Once ITC Hotels shares are credited to shareholders and trading resumes, the stock will stay in the indices for three trading days. If the stock hits the circuit limit on the first two days, its removal from the indices will be delayed by three more days. After two days of normal trading without hitting the circuit limit, ITC Hotels will be removed from the indices on the third day, even if the stock hits the price band on the final day.
Demerger Scheme and Ratio
ITC announced its plans to demerge its hotel business in August 2023 into a separate entity. Under the scheme, ITC will retain 40% ownership of ITC Hotels. Meanwhile, the remaining 60% will be distributed to ITC shareholders. Shareholders will receive one share of ITC Hotels for every 10 shares they hold in ITC.
