ITC demerger on cards? Anil Singhvi says if it happens, then it will be the biggest corporate event of year

Zee Business Executive Editor Swati Khandelwal today said that there was a big development happening in ITC. Quoting sources, Khandelwal said that ITC is readying a Demerger plan. Going forward, ITC is expecting a big unlocking of value for shareholders.

Zee Business Executive Editor Swati Khandelwal today said that there was a big development happening in ITC. Quoting sources, Khandelwal said that ITC is readying a Demerger plan. Going forward, ITC is expecting a big unlocking of value for shareholders.

After ITC Demerger, there would emerge as many as 3 companies:
1) Hotels
2) FMCG
3) Infotech

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According to sources, the Board Meet of ITC will happen in April where the management will discuss the Demerger, says Swati. This is a long term process and the company has been working on it since long and now seems that it is in the final stages of getting demerged. Investment Bankers have also started working on demerger. Paper, Textiles, Cigarettes and other FMCG companies will be a flagship company and other 2 businesses, hotels and Infotech, will be separate businesses.

Swati said that the company will be divided in 3 segments and value unlocking will be done. Management of ITC said that they don’t want to comment on Demerger news at this stage. However, they highlighted that ITC said that they will ensure sustained value creation for all stakeholders. Swati says there could be some decision on Demerger in April itself.

#ZBizExclusive | ITC से जुड़ी बड़ी खबर-

ITC में बड़े डीमर्जर की तैयारी... डीमर्जर के बाद ITC की बनेंगी 3 कंपनियां : सूत्र#ITC @SwatiKJain @AnilSinghvi_ pic.twitter.com/InO5sjtfSF

— Zee Business (@ZeeBusiness) March 17, 2021

Zee Business Managing Editor Anil Singhvi says that if ITC Demerger happens then it will be the biggest corporate event of this year. Investors have been patient and are waiting for some positive news to come regarding demerger which will unlock further value in the company. There are many businesses in ITC, some are extremely good while some are average, Singhvi added.

Singhvi said that FMCG business may be a separate Flagship company. Considering P/E valuation of 30 to 40 multiple and EPS of Rs 18 – Rs 20, the value of the stock could double from here.
Loss making business of Hotels where ITC manages 14000 rooms, could be valued at Rs 20000 cr – Rs 25000 cr, says Singhvi. Infotech business is relatively small and ITC may not be interested in keeping this business. They can sell this business and generate Rs 4000 – Rs 5000 cr.

Anil Singhvi said the Demerger process could take 3 months, 6 months or even1 year as it is a big company. Ultimately ITC can concentrate on Cigarettes business, Paper Business, Atta Business and other key FMCG products which can create more value.

Anil Singhvi said that this stock is for Investors and not for traders. Investors who will buy and hold this share will definitely make profit going forward. Anil Singhvi said that at CMP of Rs 200 – Rs 215, ITC offers great value from an investment point of view. Nifty is at life highs and ITC has not performed for the past 5-7 years. L&T has created immense value for shareholders by listing its business separately like L&T Finance, L&T Infotech, L&T Technology services. Singhvi said ITC could similarly create good value for Investors like L&T.

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