ITC Board to Discuss Software Sector Split; likely to be valued at Rs 25,000 crore, according to the report

ITC Board to Discuss Software Sector Split; likely to be valued at Rs 25,000 crore, according to report | Photo credit: PTI

Hotel cigarette conglomerate ITC Group is reportedly considering the spin-off of its software business ITC Infotech at a valuation of Rs 20,000-25,000 crore. The company is likely to appoint investment bankers in the future.

ITC Infotech, a wholly owned subsidiary of ITC Ltd, provides technology solutions to businesses in industries including banking and financial services, healthcare, manufacturing, consumer goods, travel and hospitality.

According to a report from CNBC-TV18, the company’s board of directors will meet soon to discuss plans for the spinoff.

Most of ITC Ltd’s Rs 45,000 crore comes from the cigarette business, while the rest comes from hotels and consumer products.

ITC Infotech has improved its margins in the wave of digitization in the aftermath of the pandemic and a listing could fetch the company more than Rs 20,000 crore on exchanges, analysts estimate.

ITC investors have long called for unlocking value by creating for-profit entities such as FMCG and software. The stock has remained more or less stagnant in recent years.

The mid-sized IT company provides consulting and services related to automation, manufacturing process improvement as well as digital transformation services for banks.

Following the news, ITC stock added 4% intraday gains on Wednesday and closed up 1.68% at Rs 239.50 on BSE. It was last seen trading Rs 239.40 on the NSE on Thursday afternoon.

Most analysts gave the stock a “neutral” or “held” rating after the company failed to enthuse Dalal Street with its September quarter results. The good performance of its cardboard and hotel activities was offset by weak figures for cigarettes and food in the second quarter. Brokerages believe ITC’s valuations at 16 times FY23 earnings are fair. Most brokerages have a target price in the range of Rs 225-285 per share.

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