British American Tobacco (BAT) to Use Proceeds from Stake Sale to Reach Target Leverage Ratio by 2026

BAT holds a 15.3% stake in ITC Hotels and intends to divest this holding at an optimal time to enhance shareholder value. The sale proceeds are specifically earmarked to accelerate progress toward reducing the company’s adjusted net debt/adjusted EBITDA ratio to within the 2.0-2.5 target range by 2026. This leverage reduction is driven by strong cash generation and supported by ongoing financial discipline, including strategic capital allocation and share buybacks.

Key highlights:

BAT targets a leverage ratio of 2.0 to 2.5 times adjusted net debt/adjusted EBITDA by end-2026.

Current ITC Hotels stake of 15.3% will be divested to help achieve leverage goals.

Strong operating cash flow conversion above 90% aids deleveraging efforts.

BAT has committed to a £1.1 billion share buyback program in 2025.

CEO Tadeu Marroco underscores BAT’s focus on prioritizing high-margin markets and quality growth while managing financial health.

BAT continues to see ITC as a strategic partner in India even as it reduces stake in ITC Hotels.

This financial maneuvering is aligned with BAT’s mid-term goals of revenue and profit growth while maintaining balanced capital allocation and shareholder returns, reinforcing its commitment to financial strength and operational efficiency.

Sources: TipRanks, Seeking Alpha, Economic Times, Investegate, Financial Express, London Stock Exchange