British American Tobacco, the largest shareholder in ITC, has pared its 25.4% stake in the Indian cigarette-to-food conglomerate through block deals on Wednesday, relinquishing its veto rights in the process.
BAT offloaded a 2.5% stake for Rs 12,927 crore ($1.5 billion), according to a revised term sheet, reducing its holding in ITC to 22.9%. The deal was executed at Rs 413 per share, with 313 million shares changing hands on the bourses. The transaction price reflected a 4.8% discount to ITC’s closing price of Rs 433.90 on the BSE on Tuesday. BAT stated that the net proceeds from the sale would amount to Rs 12,100 crore.
Significantly, the stake sale marks a major shift in BAT’s position within the ITC boardroom. A 25% holding enables shareholders to block special resolutions, which require 75% approval to pass. This is the second time in just over a year that BAT has trimmed its stake in ITC.
Following the latest stake sale, shares of ITC fell 4.82% intra-day on the BSE on Wednesday, before settling at Rs 420.10 apiece, down 3.12% versus the previous day’s close. Shares of BAT are owned by its local subsidiary — Tobacco Manufacturers (India) Ltd.
On Tuesday, BAT had announced plans to sell a 2.3% stake in ITC by offloading 290 million shares, valued at about $1.36 billion. The company had said that the transaction would provide greater financial flexibility to achieve its targets.
“BAT said it would use the net proceeds from the block deal to extend the Group’s existing share buyback programme by approximately Rs 2,310.6 crore, raising the total to Rs 12,714 crore.
“The extension will begin following completion of the latest tranche of the Programme announced on 29 April 2025 and is expected to complete no later than December 31, 2025,” it added.
The London-listed nicotine products seller had last sold 436 million shares, or about 3.5% of ITC, in March 2024. The stake was then offloaded for Rs 17,491 crore, which made it India’s third-largest block deal ever.
ITC, which demerged its hospitality arm, ITC Hotels, in January, posted a multifold growth in its Q4FY25 consolidated net profit to Rs 19,727 crore, mainly due to exceptional items. The profit in the year-ago period was Rs 5,121 crore. Excluding the exceptional items, Q4 profit rose 3% year-on-year to Rs 5,155 crore. Q4 revenue increased 10% year-on-year to Rs 20,376 crore.
Out of 40 analysts tracking the company, 38 maintain a ‘buy’ rating, one recommends a ‘hold,’ and one suggests ‘sell,’ according to Bloomberg data. The average 12-month consensus price target implies an upside of 14.9%.