Government bites bullet, sells 2% stake in ITC

Shares of ITC gained as much as 6 per cent after government confirmed of selling 2 per cent stake in the cigarette producer via multiple block deals on the bourses. Post stake sale government holding in ITC is expected to come down to 9.12 per cent.

In one of the boldest move taken on part of the current government via investment arm in specified undertaking of the unit trust of India (SUUTI) which held 11.12 per cent as of quarter ending December 31, it sold 2 per cent in ITC via several block deals, to raise close to Rs 6,700 crore in disinvestment money. LIC bought the sold stake in the company.

The move have been mooted over the years but government did not move ahead with the strategic disinvestment due to lack of government will. The stake sale proceeds government to move one step closer to achieving its revised disinvestment target of Rs 45,500 crore in FY17.

Post stake sale, the government would likely garner close to Rs 38,000 crore via minority stake sales and strategic disinvestment. The government has taken a smart move in dealing with the stake sale and has got a good amount in return, as the shares traded at their life-time highs.

Share of ITC was trading at Rs 279.95, up 1.75 per cent on NSE.