ITC Chairman and Managing Director, Sanjiv Puri, expressed that the demerger of the conglomerate's hotel business is actively being considered, especially since the sector has shown signs of recovery post-Covid-19. The tobacco-to-hospitality conglomerate ITC is now focused on finalizing the long-standing proposal for demerging its hotels business, which had been put on hold during the pandemic.
According to a report on CNBC-TV18, the process for demerger is currently underway, and ITC is also exploring alternative structures for its hotel business in response to industry dynamics. Additionally, the possibility of a separate listing for the hotel section is being contemplated.
ITC Chairman and Managing Director, Sanjiv Puri, informed ICCBizNews that the demerger of the conglomerate's hotel business is actively being reconsidered in light of the sector's recovery after the Covid-19 pandemic.
Puri mentioned that the company is now contemplating an "alternative business structure" for its hotel division, given the significant rebound in the hotel industry. He emphasized that the proposal for demerger is now back on the table.
"In our 2019-20 annual report, we had outlined our intention to establish an alternative structure for our hotels business. However, due to the pandemic's adverse impact on the industry, we had to defer the decision. Now, with the industry showing signs of recovery, we plan to move forward with the proposed demerger in line with the evolving dynamics," Puri explained.
He mentioned that over the past year, they have been consistently opening almost one hotel each month. As part of their "asset right" approach, the company has carefully balanced a combination of owned and managed hotels.
Previously, ITC had invested in constructing numerous hotels under its ownership, but this strategy affected capital productivity. However, the company now believes it has established a strong market position, allowing them to opt for hotels under management contracts.
As a result of these developments, the shares of ITC experienced a significant surge, reaching a record high of Rs 475, reflecting a 1.85 per cent increase.
During the fourth quarter of 2022-23, the hotel business of the company achieved a remarkable 101 per cent increase in revenues, amounting to Rs 782 crore. The EBIDTA for the business also showed substantial growth, reaching Rs 272 crore, as compared to Rs 32 crore in the same quarter of the previous year.
In the same quarter, the conglomerate's hotel business experienced an impressive 99 per cent surge in revenue, reaching Rs 809 crore. Furthermore, it reported a profit (before tax) of Rs 205 crore, a substantial improvement from the loss of 29 crore in the corresponding quarter of the previous year.
On May 30, ITC declared a final dividend of Rs 6.75 per share and a special dividend of Rs 2.75 per share of Re 1 each for the quarter that ended in March 2023.
Established in 1910, ITC holds the distinction of being the largest cigarette manufacturer and seller in India. Presently, the company operates across various business segments, including FMCG, hotels, paperboards, paper and packaging, and agribusiness.
On Tuesday, the shares of ITC reached an all-time high, showcasing impressive returns driven by its consistent and robust performance, coupled with significant price movement and heavy trading volumes. The stock of ITC rose by approximately one per cent, touching Rs 466.05, representing its 52-week high.
With a total market capitalization of around Rs 5.8 lakh crore, ITC stands as the sixth-largest listed entity on Dalal Street.
Shares of this FMCG giant have experienced a remarkable surge of approximately 65 per cent from its 52-week low at Rs 284.85, yielding a return of over 210 per cent from its Covid-19 lows. Remarkably, the stock's value has more than doubled in the past one and a half years.
