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Indian stock market giant FMCG and tobacco manufacturing company ITC Ltd has made a big announcement for its employees. The company has allotted lakhs of new equity shares under the Employee Stock Option Scheme (ESOP) to its eligible employees. In the official notice given as per the regulatory rules of Securities and Exchange Board of India (SEBI), the company clarified that the proposal to issue 7,35,050 ordinary shares has been given final approval in the meeting of the nominated committee of the board on September 17. In the corporate world, this tradition of making its employees a direct stakeholder in the company’s profit and growth is considered a very positive step, which directly increases the loyalty and efficiency of the employees towards the company.
ITC shared complete details of the process in an official filing submitted to the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) on Thursday. The company informed that this allotment has been confirmed under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. In this process, a total of 73,505 options were exercised by the option-holders, against which the process of crediting 7,35,050 ordinary shares with face value of ₹ 1 in the accounts of the employees was completed. This special meeting of the Share Allotment Committee was concluded at 11.10 am, immediately after which the information about the change in the capital structure was registered on public forums.
The total equity structure of the FMCG giant has also seen an increase following this fresh share allotment. As per the exchange filing, the total issued and subscribed share capital of ITC Limited has increased to ₹1253,05,17,081 (Rs twelve hundred fifty-three crore five lakh seventeen thousand eighty-one) since September 17. This entire capital is now divided into 1253,05,17,081 ordinary shares with a face value of ₹1 per share. Market analysts believe that ESOP allotment does lead to a marginal increase in the total number of shares, but due to the strong fundamentals and cash flow of the company, such allotment does not put any negative pressure on the share holding of existing investors.
This share allotment has come at a time when the company had announced to increase the prices of its major cigarette brands just a day ago. Cigarette and tobacco business accounts for a major portion of ITC’s total revenue and operating profit. This revision in prices was made due to increase in input costs and adjustment of excise duty. Market pundits believe that the price increase will help in protecting margins, the impact of which will be clearly visible in the financial results of the coming quarters. The gift of shares to employees immediately after the price increase also reflects the company’s internal confidence.
Amidst this gift given to the employees, the past one year has proved to be very disappointing for the common investors of ITC. ITC, considered a favorite ‘defensive stock’ of investors for a long time, has fallen by more than 35 percent in the last one year. To understand in simple words, if an investor had invested ₹ 100 in ITC shares a year ago, his capital has now reduced to only around ₹ 65. Talking about the current year only, the stock has seen a sharp decline of more than 27 percent. There has been continuous profit booking and selling pressure in stocks since October 2024, which has severely tested the patience of retail investors.
Some relief was seen in Thursday’s trading session amid continuous selling pressure. ITC shares closed at Rs 266.20 with a marginal gain of 0.78 percent. If we look at the technical charts, after the huge fall, the stock is now seen struggling near its strong support zone. Independent market experts say the stock remained sluggish due to increasing competition in the FMCG segment, restructuring process related to demerger of hotel business and slowdown in global demand. However, from a long-term perspective, ITC’s strong cash flows, expanding FMCG portfolio, paperboard and packaging business and presence in the IT sector make it an attractive long-term portfolio.