ITC block deal: PAT to sell ITC shares worth Rs 17,000 crore; will it influence passive flows?

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ITC block deal
ITC block deal

ITC block deal

ITC block deal: The move is expected to inject $105 million into the domestic index, said Abhilash Pagaria of Nuvama Institutional Equities. He expects 0.9 days of volume impact to result in an inflow of $65 million, equivalent to 13 million shares.

Shares in ITC Ltd will take center stage on Wednesday morning as British American Tobacco (BAT) plc is reported to be selling a 3.5 percent stake in the cigarette maker to institutional investors in a package deal today. According to press reports, the selling price category of the offered shares is 384-400.25 rupees, which represents a 5 percent discount compared to the prevailing market price at the lower end of the price range. Business Today could not independently verify reports of block deal.

ITC block deal

ITC block deal: The move is expected to inject $105 million into the domestic index, said Abhilash Pagaria of Nuvama Institutional Equities. He expects 0.9 days of volume impact to result in an inflow of $65 million, equivalent to 13 million shares. According to calculations by Nuvama Alternative, Sensex is expected to see inflows of $38 million. This represents 7.7 million shares and has a volume effect of 0.5 days.

ITC shares have fallen 13.48% to Rs 404.25 so far in 2024. The share price has increased by 5.31% in the last one year.

ITC block deal

Nuvama Alternatives does not expect an increase in passive global index weighting as the global index providers (MSCI and FTSE) currently use a 24% foreign ownership limit for free float.

StoxBox

Manish Chowdhury, head of research at StoxBox: “Among most stocks, we believe ITC shares may come under pressure in the near term. It seems that a near maximum has been spotted at some levels up to Rs 500. Rotation announcement.” – We will convert the hotel business into a new business in August 2023. However, given the strong brand awareness and the huge prospects of the FMCG business, we are optimistic about the company in the medium to long term.”

Chowdhury said inflation is expected to decline further, especially in rural areas, and business volume is expected to increase in the future. At the current valuation, we believe that most of the downsides have already been factored in and investors may consider adding the stock to their portfoliosat every dip.

ITC block deal

London-listed BAT said in February it was “actively working” to reduce its roughly 29 percent stake in tobacco group ITC, which operates in a range of sectors from hotels to consumer goods.

monetization stakes

The sale of the shares will allow cigarette maker Dunhill and Lucky Strike to pay down its debts and move more quickly toward debt levels that would allow it to resume share buybacks. Recently, companies like Whirlpool and Hyundai have announced monetization of their stakes in Indian companies.

ITC block deal: BAT said in its financial results for the December quarter that it continues to seek all opportunities to increase the flexibility of its balance sheet and as part of this is regularly reviewing its holdings in ITC. “We have a significant equity stake and recognize that this presents an opportunity to free up and redistribute some capital,” BAT said.

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