ITC Share Price Drops After ₹12,900 Cr BAT Stake Sale: Buy or Sell?

British American Tobacco (BAT), the largest shareholder in ITC Ltd., has sold shares worth ₹12,941 crore via a block deal, sparking fresh questions among investors. Despite the initial dip, ITC's share price showed resilience - reflecting strong domestic confidence and sound business fundamentals. Is this a setback or an opportunity for investors? Let’s decode.

Table of Contents 

1. ₹12,900 Cr ITC Stake Sale by BAT: Deal Snapshot
2. Why is BAT Trimming ITC Stake? Strategic Exit Reasons
3. ITC Share Price Performance: How Did the Stock React
4. ITC Financial Performance FY25: Solid Core, Some Margin 
5. Analyst Recommendations Post BAT Sale: Buy, Sell or Hold
6. ITC’s Growth Outlook Post Hotel 
7. Conclusion: Should You Buy ITC After BAT’s Stake Sale
8. FAQs: All About the BAT-ITC Block Deal

₹12,900 Cr ITC Stake Sale by BAT: Deal Snapshot

British American Tobacco executed a large stake sale in ITC Ltd. through a block deal on 28 May 2025. While significant in value, the deal's impact was contained by robust institutional absorption.

Key Details:

• BAT sold 313 million shares of ITC.
• Transaction value: ₹12,941 crore at ₹413 per share.
• Sale price at a 4.8% discount to previous close.
• BAT’s stake reduced from 25.4% to 23.1% post-deal.
• Second major sale since March 2024, taking total divestment to over ₹30,000 crore.
• Goldman Sachs and Citigroup acted as placement agents

Wrap-up:
This transaction marks another significant restructuring of ITC’s shareholding pattern, attracting close scrutiny from the market.

Why is BAT Trimming ITC Stake? Strategic Exit Reasons

BAT’s continued stake reduction in ITC seems driven by internal financial priorities rather than ITC-specific concerns.

Primary Reasons:

• Capital Reallocation: Proceeds to fund BAT’s £1.1 billion share buyback programme in 2025
• Debt Reduction: Targets an adjusted net debt/EBITDA ratio of 2.0–2.5x by 2026
• Modest Revenue Growth Outlook: BAT expects only 1% revenue growth in 2025 amid regulatory headwinds
• Monetising a Non-Controlling Stake: Treating its ITC investment as a liquid asset

Wrap-up:
BAT’s decision appears strategic and financial, not reflective of ITC’s business fundamentals.

ITC Share Price Performance: How Did the Stock React?

The block sale came days after ITC announced strong FY25 numbers, including a one-time gain from its hotel business demerger. The stock saw temporary volatility but bounced back swiftly.

Share Price Highlights:

• Intraday Low: ₹413 - ₹415.10 (over 4% decline
• BSE Close: ₹420.10 (-3.18)
• NSE Close: ₹421.00 (-1.19)
• Sharp intraday recovery reflects underlying investor confidence

ITC Share Price History

• 1-Year Return: +3.76%
• 6-Month Return: -6.35%
• 3-Month Return: +6.66%
• 10-Year Return: +107.91%
• 5-Year Return: +133.55%
• 3-Year Return: +65.34%

Wrap-up:

The stock’s quick rebound indicates the market viewed the block deal as a liquidity event, not a business concern.

Check latest ITC Ltd. Share price, charts and complete Financials and calculate its performance.

ITC Financial Performance FY25: Solid Core, Some Margin Pressures

Despite the promoter stake sale, ITC’s underlying business remains resilient with strong financials and operational breadth.
FY25 Financial Highlights:

Business Segment Performance:

• Cigarettes: 80%+ market share, remains primary profit driver
• FMCG (Non-cigarette): Q4 FY25 revenue up 3.7% Y-o-Y; EBIT fell 28% due to inflation, higher marketing costs
• Agri Business: Q4 FY25 revenue jumped 18%, profit up 26%.

Wrap-up:
ITC’s fundamentals remain solid despite margin pressures in FMCG. The low debt and high cash-generating core strengthen its balance sheet.

To understand more about ITC’s Q4 performance, including the hotel demerger and dividend payout, check the full ITC Q4 FY25 Results.

Analyst Recommendations Post BAT Sale: Buy, Sell or Hold?

Analysts see the dip as an opportunity rather than a concern. Increasing domestic institutional participation suggests strong local confidence.

Analyst Takeaway: Most brokerages remain optimistic on ITC, led by stable cigarette volumes, improving FMCG margins, and strong cash flows. Consensus estimates imply an 18-25% upside from current levels, with a ₹520-550 target over FY25-FY26.

Shareholding Pattern Shift (Mar 2023 - Mar 2025):

Here's the shareholding pattern of the stock:

• FIIs: Down 3.53 percentage 
• DIIs: Up 3.10%
• Retail/Public: Up 0.40%

Wrap-up:
Rising domestic institutional ownership provides a stabilising force for ITC’s stock, with analysts leaning towards a Buy or Hold stance.

Curious about How to Analyse the Shareholding Pattern of a Company? Watch the video now!

ITC’s Growth Outlook Post Hotel Demerger

The company is entering a new growth phase after demerging its hotel business in January 2025, while retaining a 40% stake in ITC Hotels.

Strategic Focus Areas:

• Value Unlocking: Isolate high-growth FMCG, cigarettes, and agri businesses for better valuations
• FMCG Growth Drive: Sharpen capital allocation and focus on margin improvement
• Valuation Re-Rating Potential: Current P/B of 7.5x is lower than FMCG peers
• Index Weightage Boost: Higher free float from stake sales may improve index representation

Wrap-up:
ITC is strategically positioned for focused growth and value unlocking, though sustained FMCG growth is key.

Conclusion: Should You Buy ITC After BAT’s Stake Sale?

BAT’s ₹12,941 crore stake sale triggered a temporary dip in ITC’s stock but did not dent the company’s operational strength. Strong fundamentals, a solid balance sheet, growing FMCG potential, and increasing domestic institutional confidence support the long-term investment case.

Also read: If you're curious about the different types of investors — like FIIs, DIIs, and retail participants — and their role in the market, check out this guide on Categories of Investors in the Indian stock market.

FAQs: Your Questions on the BAT-ITC Deal Answered

1. Why did British American Tobacco (BAT) sell its ITC shares worth ₹12,941 crore?

BAT’s sale is primarily driven by its strategic financial objectives, including funding its share buyback program and reducing debt, rather than concerns about ITC’s fundamentals.

2. How much stake did BAT sell in ITC in May 2025?

BAT sold a 2.5% stake, equivalent to approximately 313 million shares, for ₹12,941 crore at ₹413 per share.

3. What is BAT’s remaining stake in ITC after the sale?

Post-sale, BAT holds 23.1% of ITC’s equity.

4. How did the market react to BAT's ITC stake sale?

The market saw an initial dip of over 4% in ITC’s stock price, but it recovered significantly during the day, closing with a smaller decline, indicating overall confidence in ITC's fundamentals.

5. Is ITC still a good investment after BAT’s stake sale?

Analysts largely view the dip as a buying opportunity, citing ITC’s strong fundamentals, attractive valuation compared to FMCG peers, and long-term growth potential, particularly in the FMCG sector post-demerger.

6. What impact does BAT’s stake sale have on ITC’s ownership structure?

It contributes to a decrease in foreign institutional holding and an increase in domestic institutional holding, signaling growing confidence in ITC within the Indian market. It also increases ITC's free float, potentially leading to higher index weightage.

7. Who were the placement agents for the ITC stake sale?

Goldman Sachs and Citigroup acted as the arrangers for the block deal.

8. What does ITC’s FY25 performance reveal about its growth?

While reported net profit was significantly up due to a one-time gain, underlying operational performance remained strong in key segments like cigarettes and agri-business. The FMCG segment is growing in revenue but faces margin pressures.