The ITC share jumped 5.08 per cent on the BSE following the Business Standard report that the Unit Trust of India (UTI) has got the Centre's nod to sell its 11.87 per cent equity stake in the company.
The stock rose to an intraday high of Rs 676.80, recovering from the intraday low of Rs 635. The volume stood at 4.22 lakh shares on the BSE and 7.21 lakh shares on the NSE.
Analysts said the surge in the stock was purely on report that the UTI may sell its 11.87 per cent equity stake (2,93,84,118 shares) in the tobacco major at Rs 1,500 per share, a premium of 126 per cent from the current market price.
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The report added that the trust was likely to sell its stake in ITC to British American Tobacco (BAT), which already has 32.5 per cent holding in the company. ITC has a weightage of over 7 per cent in the Sensex.
Analysts said the rise in the scrip was also due to other developments such as the ban on gutkha in Maharashtra with effect from August 1 2002. The state has the largest market for tobacco products. Also, there are hopes that people would shift to lower-end cigarettes due to the ban on guthka.
Meanwhile, ITC's performance for the first-quarter ended June 30, 2002, has been good. The company posted a 15.23 per cent rise in net profit at Rs 343.92 crore compared with Rs 298.44 crore in the corresponding quarter of the previous fiscal. Sales also increased by 21.4 per cent to Rs 1,408.02 crore (Rs 1,159.62 crore). The results have met the met the analysts' expectations.
ITC has been on a diversification drive aimed at de-risking its business, which is heavily hinged on the core business of cigarettes.
The company has diversified into businesses such as atta, biscuits and confectionery. Recently, ITC merged ITC Bhadrachalam Paperboards with itself.
As on March 31, 2002, the holdings of foreign institutional investors, domestic institutions and the public stood at 49.55 per cent, 35.21 per cent and 14.5 per cent, respectively.