Technical Picks: Tata Motors, Lead, Bank of Baroda, KEC International and Hero Motors (These are published every trading day before markets open and can be read on the app) Why states are considering green hydrogen for cleaner cities What ChatGPT’s downturn tells us about AI adoptionīiden can push Netanyahu to protect Israel's democracy India’s food security is being choked by climate change Gaming companies should challenge the GST Council's decision Twitter Rebrand: Elon Musk's X misses the spot in several ways Sam Altman’s vision for AI puts him on collision course with government (republished from the FT) Slack in affordable housing calls for a rethink on sops Midcap IT’s recovery optimism faces investor scrutiny Why Reliance won’t drag markets lower for longĬhart of the Day: Will weak exports deflate growth prospects for tyre companies? Rate decisions loom, and flash PMIs have a message for central banks, markets The significance of retail selling in the market Pro Economic Tracker | Retail auto sale loses steam TVS Q1 FY24: Strong quarter, but fair stock valuationĪU SFB Q1 FY24: Can it continue to command a premium valuation?ĭodla Dairy: What should one do, post steep run-up in stock price?Īshok Leyland: Softening of input prices boosts margin outlook positiveĭalmia Bharat Q1: Good execution on sales, but margins still lagging Investing insights from our research team ICRA estimates supply to grow at a three-year CAGR of 3.5-4 per cent, lagging demand, which will facilitate the upcycle. MCPro’s Research team has given a detailed analysis of what the demerger of the hotels business means for ITC shareholders. Read here. In any case, one cannot brush aside the fact that ITC Hotels has over the last two decades grown to be a brand to reckon with.įor shareholders willing to stay in the demerger game, the hotels sector is at present witnessing earnings upgrades in the listed universe. This will enable it to tap opportunities for strategic tie-ups and access to equity and debt through the next growth cycle in hotels. Room tariffs in the premium and luxury segments, where ITC Hotels has a significant presence, are rising and occupancy in FY2024 is likely to improve to about 72 per cent from 68-70 per cent in FY2023.įollowing the demerger, ITC Hotels, which is the second largest in the country after The Indian Hotels Company both in terms of room and revenue, will be a pure play on hotels. “Consistent improvement in consumer sentiments despite the inflationary environment, stable corporate performance, and domestic air passenger traffic inching above pre-Covid levels augur well for travel and hotel demand,” says a report by ICRA Ltd on the sector. That said, the demerger is a welcome step and well-timed. Further, the nature of transfer of assets and liabilities, future capital investments required in the new entity as well as brand royalty payments to the parent (holding company) if any, are grey areas.Ī clean demerger, however, is one where the business is spun-off to a new company, with all shareholders getting shares in the new entity that mirrors their existing shareholding, points out Ravi Ananthanarayana in this piece. Perhaps the ITC management wanted to hold a substantial financial stake either to cement its control or profit from it at a later stage. Note that British American Tobacco is a large stake holder, which post-demerger will hold a 17 per cent share in ITC Hotels. Then there are concerns of selling pressure in the ITC Hotels stock, post the demerger, in case existing shareholders wish to exit. The 60 per cent stake, some say, will be lower than the company’s present annual dividend paid out. Market experts reckon that shareholder disappointment could be due to expectations of a higher share for the existing shareholders of ITC in the hotels’ entity. For now, it is known that 40 per cent of the business will be owned by the parent ITC, while the balance 60 per cent will be with other shareholders. On the contrary, it has been falling since the announcement.Īs in most mergers and acquisitions, demergers and even strategic sale, there is speculation over the pros and cons, shareholder gains and apprehensions, until the finer details are unveiled. The move, although widely expected for some time on the Street, did not spice up ITC’s stock price. It offers easy access to stories published on Moneycontrol Pro and gives a little extra by setting out a context or an event or trend that investors should keep track of.įinally, ITC Ltd’s board gave the in-principle nod to demerge its hospitality business-ITC Hotels- into a separate entity. The Panorama newsletter is sent to Moneycontrol Pro subscribers on market days.
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