BAT’s stake sale in ITC to trigger $50 million inflows as Sensex adjustment comes into effect: Nuvama

FMCG major ITC’s weight will go up in the S&P BSE Sensex, resulting in likely inflows of $50 million, according to estimates by Nuvama. Today, Sensex will adjust ITC’s free float factor as a result of British American Tobacco’s (BAT) 3.5% stake sale in the company.

Meanwhile, the adjustment on Nifty will be done during the rejig exercise on March 27. Nuvama anticipates a $70 million inflow.

On March 13, the London-based company sold shares at an average selling price of Rs 404.40 per share in block deals to institutional investors. The stake sale was worth about Rs 17,500 crore. BAT, which makes Dunhill and Lucky Strike cigarettes, sold 43.68 crore shares after which its shareholding in ITC fell down to 25.5% from 29%. The company will use proceeds from the stake sale to buyback BAT shares. It had hired BofA Securities and Citigroup to handle it.

Nuvama sees no impact of BAT’s stake sale on global indices. As global index providers MSCI and FTSE are already utilising 24% as the float, which represents the maximum foreign ownership limit, any weight increase in global passive indices is not anticipated, this brokerage said.

Today, the stock jumped 1.5% to the day’s high of Rs 427.75 on the NSE. The shares of ITC have given returns of over 13% in the past 12 months, an underperformance versus Nifty50. The latter has delivered an impressive 29% returns during this period.

The diversified conglomerate had reported a 6% growth in its consolidated net profit at Rs 5,335 crore for the quarter ended December. The same stood at Rs 5,006 crore in the year-ago period. Revenue from operations in the said quarter increased 2% year-on-year (YoY) to Rs 19,484 crore.

Segment-wise, revenue from the cigarettes business increased 3% YoY to Rs 8,295 crore, compared with Rs 8,086 crore in the last year quarter.

The profit before tax (PBT) for the cigarettes business rose marginally by 2% to Rs 4,966 crore in the December quarter.

The FMCG-others business reported revenues of Rs 5,218 crore in the third quarter, up 8% from Rs 4,849 crore posted in the corresponding quarter of last year. The PBT for the same was up 23% to Rs 433 crore.

The hotels business had a healthy quarter with revenues improving by 18% to Rs 872 crore and the profit before tax increasing as much as 56% to Rs 233 crore.

No comments

Leave a Reply