ITC Hotels Warning BAT to Offload ₹2,948 Cr Stake - Will Shares Crash Under Supply Pressure
ITC Hotels Warning has sent shockwaves across the Indian stock market as British American Tobacco announces a massive stake sale. On December 4, 2025, BAT revealed plans to sell approximately 9 percent of its holding in ITC Hotels through a block deal worth nearly 2,948 crore rupees.
The tobacco giant executed this transaction on December 5 through seven block trades on the National Stock Exchange, offloading around 187.5 million shares at 205.65 rupees per share. This strategic move reduces BAT’s stake from 15.3 percent to just 6.3 percent in India’s leading hospitality chain.
BAT inherited this stake after ITC Hotels demerged from parent company ITC Limited in January 2025. The company’s CEO Tadeu Marroco clarified that the ITC Hotels stake was non-strategic and the proceeds would help BAT achieve its deleveraging target of 2 to 2.5 times net debt to EBITDA ratio by the end of 2026.
Investors are now questioning whether this massive supply will trigger a sharp correction in ITC Hotels share price or if strong institutional demand will cushion the impact.
British American Tobacco’s decision to exit ITC Hotels stems from its focus on core tobacco business and debt reduction goals. The company acquired this stake automatically when ITC Limited demerged its hotel business in January 2025.
BAT CEO Tadeu Marroco emphasized that holding a direct stake in a hospitality company does not align with BAT’s strategic priorities. This marks the third significant divestment by BAT in the ITC ecosystem within two years.
Previously, BAT sold 3.5 percent stake in ITC Limited during March 2024 and another 2.5 percent in May 2025, collectively raising around 3.5 billion dollars. The tobacco major’s balance sheet shows net debt of 32.32 billion pounds with current leverage hovering between 2.5 to 3 times EBITDA.
By selling the ITC Hotels stake, BAT generated proceeds of approximately 3,856 crore rupees or 460 million dollars. This capital injection accelerates the company’s path toward achieving its target leverage corridor by end of 2026.
The block deal execution on December 5 saw massive institutional participation across seven separate transactions. HCL Capital through its subsidiary Vama Sundari Investments emerged as the largest buyer, acquiring 7 percent stake worth 2,998 crore rupees.
Other notable buyers included Nippon India Mutual Fund with approximately 1 percent holding valued at 171 crore rupees, Societe Generale picking up 0.5 percent for 103 crore rupees, and Morgan Stanley Asia Singapore acquiring 0.3 percent worth 62 crore rupees. Global investment giants Vanguard Group and BNP Paribas Arbitrage also participated with smaller stakes.
The presence of Abu Dhabi Investment Authority, a sovereign wealth fund from UAE, signals strong confidence in India’s hospitality sector growth potential. BAT set the floor price at 205.65 rupees per share, representing just 1 percent discount to the previous closing price of 207.75 rupees. The transaction came with a 60 day lock-in period for sellers, ensuring stability in the near term.
ITC Hotels share price experienced significant volatility during the block deal execution. The stock opened at 211.50 rupees on December 5, showing 1.8 percent gains initially as investors anticipated strong buyer interest.
However, selling pressure emerged during trading hours pushing the price down to an intraday low of 205.55 rupees, a decline of 2.2 percent from the opening level. The stock eventually closed at 205.91 rupees, down 0.87 percent for the day.
Trading volumes surged dramatically with 187.5 million shares changing hands, approximately ten times the average daily volume.
This indicates that the entire stake sale was absorbed within a single trading session without causing prolonged pressure. The stock has been range bound for about a month and remains down 21 percent year to date from its demerger highs. However, shares are still up 15 percent since the January 2025 listing, suggesting underlying strength in the hospitality business fundamentals.
| Parameter | Details |
|---|---|
| Opening Price | ₹211.50 (up 1.8%) |
| Intraday Low | ₹205.55 (down 2.2%) |
| Closing Price | ₹205.91 (down 0.87%) |
| Volume Traded | 187.5 million shares (10x average) |
| Market Cap | ₹43,196 crore |
| 52-Week High | ₹261.35 |
| 52-Week Low | ₹158 |
Market experts remain divided on the short term outlook but largely bullish on long term prospects. The swift absorption of 9 percent stake by blue chip institutional investors demonstrates solid demand for quality hospitality assets.
Analysts note that BAT retaining 6.3 percent stake signals this is not a distress sale but a strategic rebalancing. ITC Limited’s continued 39.85 percent promoter holding provides additional stability and confidence.
Historical data from similar block deals in the hospitality sector shows typical corrections of 3 to 7 percent followed by quick recovery. Some analysts expect 5 to 10 percent volatility in the coming week as the market digests the large supply.
However, the fundamental story remains intact with India’s tourism sector projected to grow at 12 percent compound annual growth rate until 2030. ITC Hotels operates over 140 properties across 90 plus destinations, competing effectively against rivals like Indian Hotels Company’s Taj brand and EIH Limited’s Oberoi chain.
The long term investment case for ITC Hotels remains compelling despite near term supply concerns. India’s luxury travel segment is witnessing strong recovery with bookings up 20 percent year on year. The company benefits from ITC Limited’s strong brand equity and distribution network across the country.
Upcoming quarterly earnings will be crucial to assess occupancy rates and revenue per available room amid broader consumer spending concerns. The mid market hospitality segment faces challenges from inflation and credit tightening but premium properties like ITC Hotels are relatively insulated. BAT’s exit removes an overhang that has weighed on the stock since the January demerger.
With no major promoter selling expected from ITC Limited’s side, the supply pressure should normalize. Investors should monitor management commentary on expansion plans and operational efficiency improvements.
The current valuation post correction may present buying opportunities for long term investors bullish on India’s economic growth story.
BAT’s decision to offload its 2,948 crore rupee stake in ITC Hotels represents corporate housekeeping rather than a fundamental red flag.
While short term volatility of 5 to 10 percent cannot be ruled out, the swift institutional absorption demonstrates confidence in the asset quality. ITC Hotels benefits from strong brand positioning, premium property portfolio, and India’s booming tourism sector.
The retained 6.3 percent stake by BAT and solid 39.85 percent promoter holding by ITC Limited provide stability. Investors should view this correction as a potential entry point rather than a reason for panic.
The hospitality sector’s growth trajectory remains intact with structural tailwinds from rising disposable incomes and increasing domestic and international travel. Long term investors focused on India’s consumption story may find current valuations attractive for accumulation.
Tags: ITC Hotels, BAT stake sale, block deal India, hospitality stocks, ITC Hotels share price, institutional investors, Indian stock market
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