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Govt will Not Sell ITC Stake in FY24

A senior official told FE that the Centre has no plans to sell part of its 7.85% stake in ITC.

A senior official told FE that the Centre has no plans to sell part of its 7.85% stake in ITC, worth about Rs 41,000 crore, at the current market rate. ITC’s stake, the precious Specified Undertaking of the Unit Trust of India (SUUTI), has brought dividends of about Rs 1,500 crore to the state coffers in FY23.

“The timing (of the sale of ITC’s stake) has not been decided yet,” the official said. ITC shares touched a fresh 52-week high of Rs 433.45 on the BSE recently, after closing at Rs 419.9 on Friday.

Even though a small stake sale in ITC would garner a decent amount of revenue to meet its disinvestment revenue target of Rs 51,000 crore for FY24, no such plan indicates a potentially better revenue position for the government. Due to the expected better tax and non-tax revenue performance.

On Thursday, the major ITC from cigarettes to hotels reported a 23.4% year-on-year rise in consolidated net profit to Rs 5,175 crore for the quarter that ended March 31, 2023 (Q4FY23), helped by its fast-growing consumer, beating Street estimates for the commodities (FMCG) and hospitality sectors, even as the agriculture and paperboards businesses took a hit.

In February 2017, the government sold SUUTI’s 2% stake in ITC, raising around Rs 6,700 crore. Since then, it has not reduced its stake in the company too much.

The fact that ITC’s stake will not be sold after 2017 may be due to the possible break-up of the group into several different entities, which may help the government realise more value in its stake.

Among other major stakes ready for sale in FY24, the government will prudently sell some of its 29.54% stake (worth Rs 38,500 crore at current market prices).

The official said the government may sell some of its stake in HZL at an appropriate time in the current financial year, keeping in mind developments in the metals market as well as investor sentiment and related party transactions proposed by HZL promoters late in the last financial year. the relevant year.

The Centre’s decision to postpone the sale of its Hindustan Zinc (HZL) stake in the last fiscal year was eroding investor sentiment following Anil Agarwal’s push for the company’s proposed $2.98 billion “related-party” cash deal. The Centre opposed the proposed deal because it was not in the interests of minority shareholders. HZL has not abandoned the proposal, a senior company official said recently. HZL shares closed at Rs 308.45 on Friday, down 0.64% from their previous close.

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