ITC Hotels Ltd., the demerged hospitality arm of ITC Ltd., is gearing up for its debut on the stock exchanges. Analysts have estimated potential listing prices and inclusion in global indices like MSCI and FTSE.
Key Insights:
- MSCI Inclusion:
According to Nuvama Alternative & Quantitative Research, ITC Hotels may qualify for inclusion in the MSCI Global Smallcap Indexes, while ITC Ltd. will remain part of the MSCI Global Standard Indexes.- Temporary Adjustment:
On January 6, 2025, MSCI plans to apply a Price Adjustment Factor (PAF) to ITC’s stock price, reflecting the spin-off. A detached security will be added temporarily until ITC Hotels begins trading.
- Temporary Adjustment:
- FTSE Index:
ITC Hotels might face exclusion from the FTSE index if it fails to list within 20 working days after the record date (January 6, 2025). FTSE has not issued an official announcement yet. - Nifty 50 Inclusion:
Similar to Jio Financial Services, ITC Hotels will initially function as the 51st Nifty 50 stock and 31st stock on the Sensex. However, its market cap and price will remain constant until trading begins.
Valuation Estimates:
- Fair Value:
Nuvama estimates ITC Hotels’ shares to list between ₹150 – ₹175 apiece. ITC Ltd.’s share price may adjust by ₹22 – ₹25 on the ex-date, accounting for ITC’s 40% stake in ITC Hotels and a 20% holding company discount. - Segment Contribution to ITC Ltd.:
- Cigarettes: ₹345/share (24x multiple)
- FMCG: ₹128/share (7x multiple)
- Hotels: ₹18/share (25x multiple)
- Agri: ₹26/share (15x multiple)
- Paper: ₹34/share (15x multiple)
- ITC Infotech: ₹14/share (20x multiple)
- Net Cash: ₹20/share
