ITC shares fall after report says government may sell stake in cigarette maker

Shares of ITC Ltd slumped about 2 percent on Monday on reports saying the government is looking at selling its stake in the company to meet its disinvestment target.

At 1327 IST, shares of ITC were trading 1.5 percent lower at Rs 275.8 on the NSE.

According to a report by The Economic Times, the Centre is considering selling its stakes in Hindustan Zinc and ITC among others to meet the disinvestment target for the current fiscal.

The government, through Specified Undertaking of the Unit Trust of India, holds 7.92 percent stake in the fast-moving consumer goods company.

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Delay in the strategic sale of Pawan Hans, Shipping Corporation of India, IDBI Bank, Bharat Petroleum Corporation and the scaled-down public offer of Life Insurance Corporation of India have forced the government to consider other options, the ET report said.

Details of an offer for sale (OFS) and the extent of divestment are still being worked out and the government expects the process to be completed by September, as per the report.

An analyst from a domestic brokerage firm, requesting anonymity, said that there is nothing much to read here. Today's fall in the stock price was merely a knee-jerk reaction to the news of stake sale, and the impact would only be known once more details on the OFS are available, she said.

This news comes after the FMCG player reported its March quarter earnings last week. ITC reported an impressive revenue growth in the cigarette business. Following a strong set of quarterly numbers and an upbeat commentary, the stock had touched a three-year high.