British American Tobacco (BAT) Plc is rumored to be selling a 3.5 percent interest in ITC Ltd. to institutional investors in block agreements today, which means that the company's shares will be the center of attention on Wednesday morning. The price range for the planned sale of shares is reportedly Rs 384–400.25 per share, which represents a 5% reduction to the going rate at the lower end of the pricing range. The block deal rumors could not be independently verified by Business Today.

According to Abhilash Pagaria of Nuvama Institutional Equities, the action will result in inflows of $105 million into local indexes. He anticipates Anticipate a $65 million inflow, or 13 million shares, with a volume effect of 0.9 days. According to Nuvama Alternative calculations, inflows of $38 million, or 7.7 million shares, are expected for Sensex with a 0.5-day volume effect.

ITC's stock has down 13.48% to Rs 404.25 so far in 2024. In the last year, the stock has increased by 5.31 percent. Since the maximum foreign ownership restriction of 24% is already being used by global index providers (MSCI and FTSE), Nuvama Alternative does not foresee a weight rise in global passive indices.

In February, the London-listed BAT said that it was "actively working" to sell its about 29% ownership in the cigarette manufacturer ITC, which operates in a variety of markets including consumer packaged products and hotels.

The company that makes Lucky Strike and Dunhill cigarettes would be able to pay off its debt and go closer to the leverage range where it could start buying back shares using the proceeds from the stake sale. Recently, businesses like Whirlpool and Hyundai said that their investments in Indian enterprises will be monetized.

BAT stated in its preliminary quarterly results for the December quarter that it was still looking for ways to improve the flexibility of its balance sheet, and that part of this effort included routinely reviewing its ownership of ITC. "We acknowledge that we own a sizable portion of the company, which gives us the chance to release and reallocate some capital.”