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ITC Ltd has purchased 0.53% stake in HLV Ltd ahead of the demerger of its hotel business. This move is an important initiative towards strengthening ITC’s hospitality portfolio. The stock of HLV Ltd, which operates premium properties like “The Leela Mumbai”, rose 2% to Rs 18.64 today.
Introduction to “The Leela Mumbai”
The Leela Mumbai, established in 1986, is the first property of The Leela Group and is counted among the most renowned 5-star hotels in India.
- HLV Ltd is part of this hotel and hospitality sector.
- The company’s stock is listed on both BSE and NSE.
ITC investment
ITC Ltd confirmed the purchase of stake in HLV Ltd in an exchange filing on December 18.
- Stake in HLV Ltd: 0.53%.
- Share price: Rs 18.64 on NSE on December 24.
- Past Performance:
- HLV Ltd gave 34% negative returns in the last 1 year.
- But this stock has given a return of 209% in 5 years of performance.
Additionally, ITC has also bought 2.44% equity stake in luxury hospitality company EIH Ltd (operator of The Oberoi).
Announcement of demerger and record date
ITC has started the demerger process to separate its hotel business.
- Record date of demerger: 6 January 2025.
- Effective date of demerger: 1 January 2025.
The transfer of shares of EIH and HLV Ltd from Russell Credit, a wholly owned subsidiary of ITC, has also been completed.
ITC’s hospitality portfolio expansion
ITC had recently announced increasing its stake in HLV Ltd and EIH Ltd.
- Being a part of an iconic hotel like “The Leela Mumbai” with HLV Ltd further strengthens ITC’s hospitality capabilities.
- With the association with EIH Ltd, which operates “The Oberoi” brand, ITC is deepening its footprint in the luxury hotel market.
HLV Ltd Stock Performance
| time period | Return |
|---|---|
| 1 year | -34% (negative) |
| 5 years | +209% (positive) |
However, despite being a penny stock, the long-term performance of HLV Ltd has been attractive for investors.
Importance of ITC and HLV Ltd investments
- ITC’s investment in HLV Ltd and EIH Ltd is part of its strategy to broaden its hospitality portfolio.
- Following the demerger, ITC Hotels will operate as a separate entity, allowing ITC to focus on its core business.
