British American Tobacco (BAT) intends to sell its 15.3% ownership in ITC Hotels by 2026. Its share in ITC’s hotel subsidiary is currently worth Rs 5,405 crore ($623 million).

During its FY24 earnings call, the company stated that it has no plans to purchase long-term shares in a network of hotels in India. Thus, it will decide when it is most advantageous to raise shareholder value. “We have no interest in becoming a long-term shareholder of a hotel chain in India,” said Tadeu Marroco, Chief Executive Officer of BAT.

Last year, BAT sold a 3.6% stake in ITC Ltd. for £1.57 billion, allowing it to begin its share repurchase program in accordance with the wishes of several important shareholders. BAT plans to repurchase a further £900 million this year, having already repurchased £700 million in 2024.

Following ITC’s extended ESOPs and BAT’s stock sale, BAT’s stake in ITC was reduced to 25.4%, or around $15 billion, in today’s currency. Moreover, BAT purchased ownership in ITC Hotels as a consequence of the demerger. During this reorganization, ITC Hotels immediately issued equity shares to ITC investors.

In accordance with their respective ownership stakes, the remaining shares were distributed to the other equity holders, with ITC keeping 40% of the shares. While BAT presently controls 15.3% of ITC Hotels, the country’s biggest insurer, Life Insurance Corporation of India (LIC), currently holds 9.2%.

Marroco also explained his plans for the proceeds from the sale of ITC Hotels’ stock. He said on the analysts’ call, “We will use the proceeds to ensure that we reach the leverage corridor of 2-2.5 by 2026,” he said during the analysts’ call.

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