Surprised to See ITC Hotels Shares in Your Portfolio? Here’s Why You Got Them

If you’ve noticed ITC Hotels shares in your portfolio and wondered how they got there, it’s due to the recent demerger of ITC Ltd.’s hotel business into a separate entity, ITC Hotels (ITCHL).

As part of this demerger, ITC shareholders received ITC Hotels shares in their demat accounts at a 10:1 ratio, meaning one ITC Hotels share was allotted for every 10 ITC shares held. Let’s Understand the same through its demerger timeline.

Understanding the ITC Hotels Demerger

ITC Ltd, a diversified conglomerate with interests spanning FMCG, hospitality, and paperboards, decided to demerge its hotel business to unlock value for its shareholders.

In June last year the company shareholders had already approved the demerger. Later in October 20204, the Kolkata bench of the National Company Law Tribunal (NCLT) approved the demerger between ITC Limited and ITC Hotels Limited.

Following this ITC announced that as all approvals are in place, the demerger of ITC Hotels will come into effect from January 1, 2025.

Board Meeting Decision Post NCLT Approval

Following the approval, ITC Ltd. announced in an exchange filing that the Board of Directors of ITC Hotels (ITCHL) approved the allotment of 125.11 crore equity shares (₹1 each) during a Board meeting on January 11, 2025.

It was approved that as part of this demerger, ITC shareholders will receive ITC Hotels shares at a 10:1 ratio, meaning one ITC Hotels share was allotted for every 10 ITC shares held as of the record date, January 6, 2025.

What Is the Record Date, and Why Does It Matter?

A record date is the cutoff date set by a company to determine which shareholders are eligible to receive benefits like dividends or bonus shares.

The record date—set as January 6, 2025—is the date on which shareholders must hold ITC shares to be eligible for ITC Hotels shares. If you owned ITC shares on or before this date, you automatically received ITC Hotels shares in your demat account at a 10:1 ratio.

However, if you bought ITC shares after the record date, you were not eligible for ITC Hotels shares. Only shareholders with ITC holdings as of January 6, 2025, received the new shares.

Conclusion

The demerger of ITC Hotels from ITC Ltd. marks a significant step in restructuring, allowing both entities to focus on their core strengths. As an ITC shareholder, you received ITC Hotels shares automatically if you held ITC stock before the record date.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.