Why today's 2% decline in ITC Limited shares was explained

In the early trading session on Tuesday, March 12, 2024, shares of ITC Ltd experienced a decline following an announcement from British American Tobacco (BAT) regarding a potential disposal of a "small part" of its shareholding in the Indian conglomerate through an on-market block trade.

As a result of this development, India's fast-moving consumer goods (FMCG) major witnessed a drop of 2.46 percent, touching a low of Rs 399.30 compared to its previous close of Rs 409.40.

BAT had previously disclosed a decrease in its stake in ITC from 29.19 percent in 2022 to 29.02 percent in 2023.

"BAT selling shares will not have a significant impact. Decision-making will be faster now. If that were to happen, then re-listing of ITC Hotels could take place followed by value unlocking in these counters," Vinit Bolinjkar, Head of Research at Ventura Securities, told Business Today TV.

In February, BAT announced its intentions to actively reduce its approximately 29 percent stake in the Kolkata-based company, making it the largest stakeholder in ITC.

Meanwhile, ITC made a separate move by acquiring shares of Sproutlife Foods Pvt Ltd.

On the Bombay Stock Exchange (BSE), approximately 15.97 lakh shares were traded on Tuesday, surpassing the two-week average volume of 6.08 lakh shares. The turnover on the counter amounted to Rs 64.12 crore, resulting in a market capitalization (m-cap) of Rs 5,01,630.29 crore.

In terms of financial performance, ITC's profit for the third quarter of fiscal year 2024 (Q3 FY24) saw a 10.8 percent increase, reaching Rs 5,572 crore for the three months ended December 31, compared to the previous year.

Revenue from operations also rose by 2 percent, amounting to Rs 17,665 crore, with the cigarette business showing a growth of 3.6 percent.

Furthermore, ITC's hotels business, which is set to demerge into a separate entity, witnessed an 18 percent surge in revenue during the quarter, driven by a robust revival in domestic tourism and increased demand from corporate bookings.

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