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ITC stock slipped over 4 per cent on Thursday (February 8) after British American Tobacco (BAT) said it could sell some of its stake in the company, recovering partially in trade.
The stock of the cigarette-to-hotels conglomerate traded at Rs 420 levels, rising 1.3 per cent in intraday deals as compared to the S&P BSE Sensex that traded flat for most part of the day.
The development, meanwhile, saw Jefferies downgrade the stock to hold from buy earlier with a target price of Rs 430, down a huge 17.3 per cent from its earlier price target of Rs 520. ....
BAT has 29.03% holding in the cigarette-to-chips conglomerate, as per December 2023 disclosures. Based on Mondays closing price, BATs shareholding is valued at Rs 1.47 lakh crore ($17.75 billion). ITCs total market capitalisation amounted to Rs 5.07 lakh crore ($61.17 billion). BAT sells cigarettes under brands such as Dunhill, Kent and Lucky Strike. The value unlocking could potentially help it prune leverage and resume a share buyback programme to enhance shareholder value. It launched the 2 billion buyback in 2022, but didnt renew it last year. ....
British American Tobacco: BAT has 29.03% holding in the cigarette-to-chips conglomerate, as per December 2023 disclosures. Based on Monday’s closing price, BAT’s shareholding is valued at Rs 1.47 lakh crore ($17.75 billion). ITC’s total market capitalisation amounted to Rs 5.07 lakh crore ($61.17 billion). BAT sells cigarettes under brands such as Dunhill, Kent and Lucky Strike. The value unlocking could potentially help it prune leverage and resume a share buyback programme to enhance shareholder value. It launched the 2 billion buyback in 2022, but didn’t renew it last year. ....
BAT s potential stake sale in ITC could result in a supply overhang of about $2.5 billion. BAT is facing challenges from declining cigarette volumes in key markets, including the US. The company also holds $40 billion in net debt, accounting for 3x Ebitda and nearly 60% of the market cap. ....