ITC Chairman and Managing Director Sanjiv Puri said on July 21 the demerger of the conglomerate's hotel business is “very much on the table” following the recovery in the hospitality industry after COVID-19.
Speaking with CNBC-TV18, Puri said, "We will take it forward in line with industry recovery dynamics. So all the indications now are that the industry is on a positive trajectory. So, that is where it stands, it's very much on the table."
A day before at the ITC's 111th annual general meeting (AGM), Puri had informed shareholders about the plans to unlock value for the hotel business demerger. ITC had first declared its intent to create alternative structures for the hotel business before the pandemic in the 2020 annual report. Since then, the Street has awaited details on it as ITC, with its more than 100 properties, is among the largest hotel chains.
While not giving details on the ITC hotel business demerger plan, Puri also said there are a lot of synergies in staying as a conglomerate and it helps the firm to "identify the opportunities quite speedily and get various expertise to work together and work seamlessly and find solutions."
On FMCG, Puri felt that inflation was a concern that has caused value-seeking behaviour among consumers. But he also saw an overall trend of demand recovery across categories.
"As far as FMCG is concerned, there are concerns certainly arising out of inflation and there is more value-seeking behaviour. There are pockets of impact on volume as well," he said.
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Meanwhile, the uptrend in the ITC share price continued on Thursday, July 21, with the cigarette-hotel-FMCG firm's scrip topping the Rs 300-mark for the first time in three years. The scrip settled at Rs 299.50 at Thursday's closing, after hitting the day's high at Rs 302.20 on BSE. So far this year, the ITC stock price has given a return of more than 36 percent.
Market expert Deven Choksey of KRChoksey saw more investors lapping up the stock for long term as the demerger will unlock the value going forward.
"This is the first, probably, demerger act which may happen with the hotel business and subsequent to that you will also have the other businesses getting demerged and that is what we see as a roadmap for them... One would definitely stay long, if one is a long-term investor,” Choksey told CNBC-TV18.
