British American Tobacco Plc. will offload shares worth nearly Rs 3,000 crore in ITC Hotels Ltd. via large deals on Friday. The company will sell shares at a floor price of Rs 205.65 in the secondary market, according to a termsheet.
BAT affiliates Tobacco Manufacturers (India) Ltd., Myddleton Investment Co. and Rothmans International Enterprises Ltd., intend to sell between 7% and 15.3% of the share capital in ITC Hotels to investors by way of an accelerated bookbuild process, the company said in a regulatory filing.The final number of shares sold will be determined to optimise the overall pricing outcome to the Group, the filing said.
The UK company's direct shareholding of 15.3% in ITC Hotels was a result of the demerger process that was completed by ITC Ltd. earlier this year. The current market value of its equity holding is Rs 6,600 crore.
A direct stake in ITC Hotels is not a strategic holding for BAT, said CEO Tadeu Marroco, adding that the proceeds from this transaction will further support continued progress towards their stated 2026 deleveraging plan.
British American Tobacco held a 22.9% stake in ITC as of September. ITC owns 39.85% in ITC Hotels.
Shares of ITC Hotels settled flat at Rs 207.75 apiece on the BSE, ahead of the announcement, compared to a 0.2% advance in the benchmark Sensex. The stock has risen 21% since listing.# ITC Hotels Block Deal: BAT Offloads Shares Worth Nearly Rs 3,000 Crore – A Strategic Trim or Market Signal?
December 4, 2025**
In a move that's sending ripples through India's hospitality sector, British American Tobacco (BAT) is set to offload a significant chunk of its stake in ITC Hotels Ltd. through block deals today, valued at nearly Rs 3,000 crore. This isn't just another insider shuffle—it's a direct fallout from ITC's high-profile demerger of its hotels arm earlier this year, highlighting how global tobacco giants like BAT are fine-tuning their portfolios amid India's booming tourism rebound. As the Sensex edges higher, ITC Hotels shares held steady, but savvy investors are eyeing this as a potential entry point or liquidity boost for the unlisted-turned-listed player.
The transaction underscores BAT's pivot away from non-core assets, with proceeds earmarked for debt reduction. But what does it mean for ITC Hotels' growth trajectory and shareholder value? Let's dissect the deal, its backstory, and the road ahead in this post-demerger landscape.
### The Deal Decoded: Key Facts at a Glance
BAT, through its affiliates, is executing an accelerated bookbuild in the secondary market, targeting institutional buyers. Here's the breakdown:
| Aspect | Details |
|--------|---------|
| **Seller** | BAT affiliates: Tobacco Manufacturers (India) Ltd., Myddleton Investment Co., and Rothmans International Enterprises Ltd. |
| **Stake Sold** | 7% to 15.3% of ITC Hotels' share capital (final quantum to be finalized post-bookbuild) |
| **Floor Price** | Rs 205.65 per share |
| **Deal Value** | Nearly Rs 3,000 crore |
| **BAT's Pre-Deal Holding** | 15.3% direct stake in ITC Hotels (valued at Rs 6,600 crore at current prices); 22.9% in parent ITC as of September 2025 |
| **ITC's Ownership** | 39.85% in ITC Hotels |
| **Timeline** | Block deals executed today, December 4, 2025 |
This stake originated from ITC's demerger of its hotels business in early 2025, which spun off the subsidiary as a separate listed entity. The move allowed ITC to unlock value in its diversified portfolio, with hotels contributing robust growth amid a 15-20% CAGR in India's hospitality demand.
BAT CEO Tadeu Marroco framed it plainly: "A direct stake in ITC Hotels is not a strategic holding," with the windfall supporting the group's 2026 deleveraging plan. It's a pragmatic exit—BAT retains meaningful exposure via its ITC stake, but sheds the hospitality overhang.
### Backstory: From Demerger to Deal Desk
ITC's hotels demerger, approved in late 2024 and effective early 2025, was a masterstroke for value creation. The business—home to iconic brands like Welcomhotel and Fortune—boasts a pipeline of 6,000+ keys and EBITDA margins north of 30%, outpacing peers in a sector projected to hit $30 billion by 2030. Listing in January 2025, ITC Hotels debuted strong, surging 21% from IPO levels to Rs 207.75 as of today's close.
BAT, ITC's largest shareholder, scooped up the 15.3% allocation pro-rata. But with tobacco regulations tightening globally and India's hospitality pivot accelerating, this block deal feels like housekeeping. It's BAT's second major ITC-related trim this year—recall their Rs 12,900 crore stake sale in ITC itself back in May—signaling a broader portfolio rebalance.
Market reaction? Muted so far. ITC Hotels ended flat at Rs 207.75, a hair below the floor price, while parent ITC dipped marginally 0.5%. Broader sentiment remains bullish, with analysts like Motilal Oswal pegging ITC Hotels at 25x FY27 EV/EBITDA for its asset-light expansion.
### Investor Implications: Opportunity or Caution Flag?
For ITC Hotels, this could be a liquidity jolt—infusing fresh capital from long-only funds hungry for hospitality plays. The sector's tailwinds are undeniable: government tourism push, inbound recovery post-COVID, and urban leisure boom. With occupancy rates at 75%+ and RevPAR up 12% YoY, the company is primed for 20%+ revenue growth.
That said, BAT's exit isn't a vote of no-confidence; it's strategic pruning. Risks linger—execution on new properties, forex volatility for imports, and competition from IHCL or Lemon Tree. For parent ITC, it streamlines focus on FMCG and cigs, potentially juicing ROCE to 35%+.
In the bigger picture, this deal spotlights India's demerger wave: unlocking Rs 50,000+ crore in value across corporates like Reliance and Adani. Promoters offloading post-spin (like BAT here) often precedes reratings—witness Godrej's consumer split last year.
### Actionable Takeaways for Your Watchlist
1. **Track the Bookbuild**: Monitor final pricing and buyer identities post-market close—could reveal FII interest levels.
2. **Entry Strategy**: If shares dip below Rs 200 on any overhang, consider accumulating for 15-20% upside in 12 months, per consensus targets.
3. **Broader Bets**: Pair with sector peers like Indian Hotels (IHCL) for diversification; hospitality ETFs are gaining traction too.
4. **Demerger Radar**: Screen for upcoming spins like Vedanta's—insider sales often signal undervaluation.
As BAT cashes out, ITC Hotels stands taller as a pure-play bet on India's travel renaissance. Is this the spark for a hospitality rally into 2026? Eyes on the tape.
What’s your take—bullish on hotels post-deal? Share in the comments. Until next, trade sharp.
*Disclaimer: This is not financial advice. Always DYOR or consult a pro. Markets involve principal risk.*
