British American Tobacco confirmed it is considering offloading a small part of its holding in Indian conglomerate ITC Limited in response to recent market rumour. The action is in line with BAT's strategy of realigning its business and priorities in terms of capital use.
May 27, 2025: BAT publicly disclosed that it is mulling an on-market sale of a portion of its holding in ITC, one of India's largest and most diversified conglomerates. Although no decision has been taken, the disclosure has evoked keen interest from investors and market observers, considering BAT's long-term and significant holding in ITC.
Background and Context
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BAT is the largest individual shareholder in ITC with around 25.5% of the company following a previous block trade in which it lowered its holding from 29% in March 2024.
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ITC is India's largest cigarette maker and diversified into hotels, FMCG, and other businesses.
Current Announcement
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BAT confirmed that it is considering a potential disposal of a small portion of its ITC shareholding through an on-market sale, but noted that there is no guarantee a transaction will take place or what terms it may be on.
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The business said that any further update will be released as necessary, and the process remains at an evaluation phase.
Strategic Rationale
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The transaction is part of BAT's wider transformation strategy, centered on its "Smokeless World" ambition and accelerating investment in nicotine and smokeless tobacco products.
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Proceeds from any disposal are anticipated to contribute to BAT's share buyback program and enable the company to deleverage, with a target net debt/EBITDA ratio of 2–2.5x by 2026.
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BAT reaffirmed its goal of delivering maximum shareholder value and retaining a progressive dividend policy.
Market Impact and Previous Transactions
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Earlier stake cuts by BAT in ITC have provoked dramatic market reactions, such as a 3.4% fall in ITC Hotels' share price after a divestment plan announcement earlier this year.
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BAT's most recent big sale of ITC shares in March 2024 raised about ₹17,491 crore, helping it initiate a sustainable share buyback program.
Future Outlook
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BAT continues to hold an important shareholding in ITC and still has faith in ITC's management and long-term potential.
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The company's transformation objectives are to have 50 million adult consumers of its smokeless products by 2030 and for half its revenue to come from these products by 2035
Sources: Investegate, Investing.com, Business Standard, BAT.com, Angel One, Morningstar
