homemarket NewsWith BAT, Whirlpool, the trend of MNC promoters paring stake in Indian units continues
With BAT, Whirlpool, the trend of MNC promoters paring stake in Indian units continues
Last week, Japanese promoter Sumitomo Wiring Systems offloaded a 4.4% stake in Samvardhana Motherson International for ₹3,633 crore through block deals.
British American Tobacco (BAT), the largest shareholder in cigarette-to-hotels conglomerate ITC Ltd. has announced that it will sell 3.5% stake in the latter via block deals on Wednesday. The stake sale will take place at a price range of ₹384 - ₹400 per share and is valued at ₹16,775 crore.
BAT intends to use the proceeds to buyback its own shares starting with a 700 million buyback this year.
With this, the trend of foreign promoters / shareholders, selling stake in their Indian counterparts at elevated valuations has continued.
In February this year, Whirlpool Corp. sold 24% equity in Whirlpool of India via block deals, bringing their shareholding down to a controlling 51%.
"When you have a business trading at 50 times multiple when your own company trades a lot lower, it's an asset arbitrage. That's what it is. But we believe in the long-term future growth of India," Bitzer told CNBC in an interview post the stake sale.
CNBC-TV18 had reported earlier that Whirlpool of India is trading at a financial year 2025 price-to-earnings multiple of 43 times, compared to its global parent, which trades at a multiple of 7 times.
Last week, Japanese promoter Sumitomo Wiring Systems offloaded a 4.4% stake in Samvardhana Motherson International for ₹3,633 crore through block deals.
Timken India's parent had also sold 8% equity via block deals in June last year. In eight months since that transaction, which took place on June 20, 2023, the stock has been an underperformer, declining 13%.
Sunil Singhania of Abbakkus Asset Management wrote on Social Media Platform "X" about BAT using the proceeds to buyback its own shares.
ITC is currently trading at a price-to-earnings multiple of 22.48x for financial year 2025, compared to BAT, which is trading at 6.2x.Parent selling its holding in subsidiary trading at 25x PE, 8x BV, 7x Sales, 3% div yieldTObuy-back its own shares trading at 6X PE, 1x BV, 2x Revenues, 10% div yield.
That looks a good BAT :-)— Sunil Singhania (@SunilBSinghania) March 12, 2024
Shares of ITC ended 1% lower on Tuesday and have corrected 20% from their peak they hit in July last year.
First Published: Mar 12, 2024 5:59 PM IST
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