ITC Hotels demerger could lead to passive outflow of $180 million: Nuvama
“Assuming the current static price of around Rs 260 remains on the day of exclusion, the passive flow for Nifty50 will be around $110 million (current weight of 23bps), and for Sensex, it will be around $70 million (current weight of 28bps),” Nuvama said.
In a special price discovery session, ITC share price got adjusted by Rs 26 on NSE and by Rs 27 on BSE as the stock started trading ex-demerger on Monday.
As the demerger ratio is 1:10, meaning one share of ITC Hotels for 10 shares of ITC, the domestic indices are now assigning a value of around Rs 260 for ITC.
Also read | ITC Hotels demerger: 6 reasons why it is a win-win for ITC shareholders
Hotels on Nifty50 indices and about Rs 270 on BSE indices.
Until ITC Hotels gets listed separately, the stock will be treated as a “dummy entity” with a static price. This means that ITC Hotels will be held at a fixed price for the time being.According to calculations by Nuvama Alternative, ITC Hotels is expected to be listed in the next 30-40 days. “ITC Hotels will be removed from all NSE and BSE indices at its last traded price, effective at the open on the ITC Hotels listing date, plus 3 business days. If the stock hits circuit limits, the exclusion will be postponed by two trading days for each instance,” Nuvama’s Abhilash Pagaria said.Nuvama expects ITC Hotels to meet the criteria for inclusion in the MSCI Global Small Cap Indexes but will be excluded if it does not list within 20 working days after the record date of the demerger.
