ITC Stock Takes a Hit as British American Tobacco Plans to Sell Shares
ITC Stock Slumps Following BAT’s Stake Sale Announcement
Shares of ITC Ltd. took a sharp dip on Wednesday, dropping nearly 5%, after news broke that British American Tobacco (BAT), its biggest investor, is planning to offload a chunk of its stake in the Indian conglomerate.
BAT’s Downsizing Plans
BAT, which held a 20.31% stake in ITC as of March 31, 2025, through its local subsidiary Tobacco Manufacturers (India) Ltd., aims to sell a 2.3% stake worth Rs 11,600 crore in a block deal on Wednesday. This sale is priced at Rs 400 per share, representing an 8% discount to the current market price. If the deal goes through, BAT’s ownership in ITC will shrink to 18%.
Analyst Concerns and Future Outlook
This development has raised concerns among analysts. Nuvama Research believes that the overhang of potential future stake sales by BAT could have a negative impact on ITC in the long run. They predict the stock will likely remain range-bound between Rs 400-470 in the near term.
Nuvama Research also suggests that the stock could see upward movement after a few quarters if there is clarity regarding no further sales by BAT. However, they remain cautious and expect BAT to potentially sell more shares in the coming quarters.
Previous Stake Sale and BAT’s Rationale
This isn’t BAT’s first foray into selling ITC shares. In March 2024, they divested 436.9 million shares, representing 3.5% of ITC, for Rs 17,491 crore, marking the third-largest block deal in India’s history.
According to a statement released by BAT, this latest transaction will provide them with increased financial flexibility. They aim to use these funds to invest in transformation, reduce debt, and ultimately deliver sustainable shareholder returns.
