ITC Block Deal: The share price of this FMCG giant plunged by more than 4% in the opening bell of May 28th, after its major shareholder, British American Tobacco p.l.c. (BAT), sold a 2.3% stake, translating to approximately Rs 13,863 crore. ITC shares are under pressure this week after its Q4 results for FY25.
ITC Block Deal:
At the opening time of 9:15 AM, a total of 10,872,872 shares exchanged hands at Rs 417.4 per share on BSE. Another large 2,131,410 equity shares exchanged hands at 9:16 AM at Rs 419.3 per share. As per the reports, between 32 crore to 33 crore shares have been exchanged in six block deals in the early trade.
During that time, ITC shares touched an intraday low of Rs 415.10 apiece on BSE, falling by 4.33%.
At the time of writing, ITC stock traded at Rs 420.30 apiece, down by 3.13% with market cap of Rs 5,25,968.45 crore. ITC is the second largest FMCG company in India, after HUL in terms of market share.
On May 27, BAT announced that its wholly-owned subsidiary Tobacco Manufacturers (India) Limited ("TMI") intends to sell c.2.3 per cent of the issued ordinary share capital in ITC Limited ("ITC") (the "Block Trade Shares") to institutional investors by way of an accelerated bookbuild process (the "Block Trade"), subject to customary closing conditions.
Tadeu Marroco, Chief Executive of BAT, said "ITC is a valued associate of BAT in an attractive geography with long-term growth potential where BAT benefits from exposure to the world's most populous market. Whilst this transaction supports the delivery on our commitments to BAT shareholders, we continue to view ITC as a core strategic component of our global footprint as we partner on business opportunities in India. I am confident that ITC, under the stewardship of its current management, will continue to create further value for its shareholders."
BAT said that the details of the value of net proceeds received will be shared once the transaction has completed. Other than the intended increase to the 2025 share buyback, the transaction has no impact on 2025 or 2026 guidance.
ITC-BAT Shareholding:
BAT and ITC have a long-standing relationship. The London-headquarted tobacco giant first invested in ITC during early 1900s.
In its latest statement, BAT said, as one of India's leading FMCG enterprises, ITC has delivered significant value for its shareholders. Following completion of the proposed Block Trade, BAT will remain a significant shareholder of ITC, with a c.23.1 per cent holding.
ITC Share Price Recommendation:
Notably, ITC stocks are under pressure since previous session. The week started off with 1.5% upside on May 26, but ITC shares toppled by 2.03% on May 27th. From May 27th to May 28th intraday low, ITC shares have crashed by over 6%.
ITC posted a steady Q4FY25 performance, with revenue rising 9.4% YoY, led by robust growth in the Cigarette and Agri businesses. The Cigarette segment saw a 6% YoY increase, supported by 4% volume growth, while the Agri segment grew 11% YoY, driven by strong momentum in leaf tobacco, value-added agri exports (coffee, spices), and improved rice exports. The FMCG business delivered a modest 4% YoY growth amid weak demand and elevated input costs. The Paperboards segment registered ~6% YoY growth, though profitability remained under pressure due to pricing headwinds from low-cost imports, subdued domestic demand, and a steep rise in wood costs, as per Axis Securities note.
Nonetheless, ITC's long-term outlook is strong and hence the broker has recommended BUY.
Analysts at Axis in their note said, "We believe ITC's long-term growth trajectory remains intact, with most segments (excluding FMCG and Paperboards) on a steady path. 1) Cigarette volumes continue to grow, supported by innovations and premiumisation. 2) The Agribusiness remains resilient, driven by strong customer relationships and agile execution in leaf tobacco, coffee, and spices. 3) While FMCG growth has been impacted by muted urban demand and input cost inflation, the sector is poised for a recovery. The government's recent budget measures, along with expanding outlet coverage, localisation strategies, and premiumisation efforts, are expected to revive growth in the coming quarters." The target price is at Rs 500.
Disclaimer: The recommendations made above are by market analysts and are not advised by either the author, nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.
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