📷 Image Credits: Moneycontrol
ITC shareholders have voted overwhelmingly in favor of the demerger of the conglomerate’s hotel business, leading to a surge in the stock price by over 1%. The approval came as 99.6% of the shareholders supported the demerger, while only 0.4% voted against it. This decision marks a significant change in ITC’s organizational structure, aligning with the company’s strategic goals.
The stock price of ITC witnessed a positive movement on June 6, reaching Rs 434 per share following the shareholder vote. Despite facing a slight decline earlier this year, the company’s shares have shown resilience in the market, demonstrating the investor’s confidence in the brand. The 52-week high of Rs 499 per share achieved on July 24, 2023, serves as a reminder of the company’s potential for growth.
According to the exchange filing by ITC, the purpose of the demerger was to realign its subsidiaries and shareholder interests, leading to a more focused approach in the hotel business segment. This strategic move aims to enhance the overall value proposition for the shareholders and further strengthen the company’s market position.
In the Q4FY24 results, ITC reported a decline of 1.31% in net profit to Rs 5,020 crore, while the revenue saw a modest increase of 1.4% year-on-year to Rs 17,752 crore. Moreover, the company declared a final dividend of Rs 7.50 per ordinary share for the financial year ending March 31, 2024, showcasing its commitment to rewarding the shareholders.
The hotels segment of ITC performed exceptionally well during the quarter, achieving record-high revenue and profits. The strong growth in Revenue per Available Room (RevPar) from retail, MICE, and marquee events contributed to this success. With a revenue growth of 15.6% year-on-year to Rs 2,989 crore and an EBITDA increase of 26.2% year-on-year to Rs 1,049 crore, the hotels segment emerged as a key driver of profitability for the company.
Following the strong quarterly performance, analysts at Centrum have provided a ‘buy’ rating for ITC with a target price of Rs 536 per share. This positive outlook reflects the market’s optimism towards the company’s future growth prospects and value proposition. With the recent demerger approval and focus on core business fundamentals, ITC is poised for a new phase of growth and expansion in the competitive market landscape.
