Last Updated: March 12, 2024, 11:54 IST
ITC shares down 20% from peak amidst potential BAT block deal
BAT at the moment holds a 29 per cent stake in ITC as per its shareholding sample from the December quarter.
ITC shares slipped 2.5 per cent in early commerce on March 12 as British American Tobacco (BAT) is making ready to dump a portion of its stake as quickly as this week, as per reviews. With in the present day’s drop, the inventory has declined 20 per cent from its peak of Rs 499.7, which it hit in July 24 final 12 months.
Sources advised CNBC-TV18 that British American Tobacco (BAT), ITC’s largest shareholder is planning to launch its share sale as early as this week.
BAT at the moment holds a 29 per cent stake in ITC as per its shareholding sample from the December quarter.
These offers are sometimes carried out at a reduction to the present market worth. According to Bloomberg, particulars of the transaction may nonetheless change, and the launch of the providing could spill into subsequent week relying on market situations, mentioned the sources.
Analysts and merchants monitoring ITC mentioned the proposed stake sale doesn’t change the elemental image however may put strain on the inventory within the brief time period due to a provide overhang.
It can even create a lovely shopping for alternative for traders attributable to ITC’s sturdy model presence and development prospects in its FMCG enterprise, broking agency Jefferies, which just lately downgraded the inventory to “hold” from “buy”, mentioned.
The availability of such an enormous block of shares implies that potential traders trying to purchase a big amount needn’t purchase it from the open market and danger driving up the value.
A key problem BAT confronted in offloading a 4 per cent stake in ITC is navigating the regulatory hurdles imposed by the Reserve Bank of India on overseas possession in tobacco companies, which limits who should purchase these shares.
The complexity of divesting ITC’s shares is immense, BAT CEO Tadeu Marroco mentioned in December. “There are specific RBI approvals that are required in respect of any action-taking about our stake, and this adds a significant level of additional bureaucracy,” he mentioned. As a end result, “the universe of buyers is limited” for ITC shares, the CEO mentioned.
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