ITC Board of Directors to discuss the software business split; likely to be valued at Rs 25,000 crore, according to report

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ITC Board of Directors to discuss the software business split; likely to be valued at Rs 25,000 crore, report says | Photo credit: PTI

The cigarette conglomerate at hotels ITC Group is reportedly considering splitting its software company ITC Infotech at a valuation of Rs 20,000 to 25,000 crore. The company is likely to appoint investment bankers in the future.

ITC Infotech, a wholly owned subsidiary of ITC Ltd, provides technology solutions to businesses in industries such as banking and financial services, healthcare, manufacturing, consumer goods, travel and hospitality.

According to a CNBC-TV18 report, the company’s board of directors will meet soon to discuss the plans for the split.

Most of ITC Ltd’s Rs 45,000 crore comes from the cigarette trade, while the rest comes from hotels and consumer products.

ITC Infotech has improved its margins in the wave of digitization in the aftermath of the pandemic and a listing could bring the company more than Rs 20,000 crore on the stock exchanges, analysts estimate.

ITC investors have long demanded to unlock value by creating for-profit entities like FMCG and software. The stock has remained more or less stagnant in recent years.

The mid-cap IT company provides advice and services related to automation, manufacturing process improvement as well as digital transformation services for banks.

After the news, ITC stock added 4% intraday gains on Wednesday and closed up 1.68% at Rs 239.50 on BSE. It was last seen trading Rs 239.40 on the NSE on Thursday afternoon.

Most analysts have a “neutral” or “retained” rating on the stock after the company did not thrill Dalal Street with its September quarter results. The good performance of its cardboard and hotel businesses was offset by weak figures for cigarettes and the agro-segment during the second quarter. Brokerages believe the ITC’s estimates of 16 times FY23 earnings are correct. Most brokerage firms have a target price of between 225 and 285 rupees per share.


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