ITC Share Price Falls Over 4% After BAT Stake Sale—Should You Buy The Dip Or Stay Away?

Shares of Indian consumer goods major ITC Ltd. fell sharply on Wednesday morning after British American Tobacco (BAT) announced a plan to offload a 2.3% stake in the company via a block deal. The move triggered investor concerns, pulling the stock down despite continued long-term bullish sentiment among analysts.

ITC Share Price Today
On the BSE, ITC stock opened at Rs 418.00, hit a low of Rs 415.10, and was trading at Rs 420.95 at 10:19 AM, down 2.98% or 12.95 from the previous close of Rs 433.90.

On the NSE, the stock opened at Rs 417.70, touched a low of Rs 413.00, and was last seen trading at Rs 421.10 at 10:20 AM, down 1.16% or 4.95 pts.

Why Is ITC Share Price Falling?
The decline follows BAT’s announcement on Tuesday that it plans to sell up to 2.3% stake in ITC, valuing the block trade at approximately $1.4 billion. According to a term sheet reviewed by Reuters, the sale will involve up to 290 million shares at a floor price of ₹400 per share, representing a 7.8% discount to ITC’s closing price on Monday.

Despite the sale, BAT will retain a 23.1% stake in ITC, continuing to be the largest shareholder in the company.

In a statement cited by Reuters, BAT said, “This transaction allows us to enhance returns to shareholders through an expanded buyback programme.”

The company plans to boost its 2025 share buyback programme by £200 million, bringing the total to £1.1 billion ($1.49 billion).

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BAT To Sell $1.4 Billion Stake In ITC Via Block Deal - Check Floor Price

No Certainty the Transaction Will Proceed
BAT has, however, clarified that the deal is not guaranteed to go through. The company stated, “There can be no certainty that any such transaction will proceed.” Further details about the timeline or final terms were not disclosed.

The move comes amid BAT's sluggish revenue outlook. In its February 2025 forecast, BAT projected just 1% annual revenue growth, citing tax and regulatory headwinds in markets such as Bangladesh and Australia.

This is not BAT’s first big divestment from ITC. In 2023, the tobacco major sold a 3.5% stake (436.9 million shares) for around $2 billion, which was one of the largest block deals in Indian equity markets.

ITC Share Price History
Over the long term, ITC has delivered consistent returns to investors. In the last 10 years, the stock has surged 107.91%, while over the past 5 years, it has gained an impressive 133.55%. The 3-year return stands at 65.34%, reflecting the company's growth across core businesses. However, shorter-term performance has been mixed. In the past year, ITC’s share price edged up by only 3.76%, and in the last six months, it fell by 6.35%. Over the past three months, the stock has rebounded, gaining 6.66%, but dipped again by 1.82% in the last one month and 2.76% over the past week.

ITC Share Price Target
According to a May 26, 2025, report by Mirae Asset Sharekhan, analysts maintain a ‘Buy’ rating on ITC with a price target of Rs 522, compared to the current market price of Rs 443 at the time of the report.

The report said: “Volume growth of the cigarettes business is expected to sustain, with no increase in tax in the recent budget. ITC has undertaken strategic actions to revive growth in the non-cigarette FMCG business. After the demerger of the asset-heavy hotels business, ITC’s return profile will substantially improve in the coming years.”

It added, “The stock continues to trade at a discounted valuation of 24x and 22x its FY26E and FY27E EPS, respectively.”

While the announcement of BAT’s stake sale has spooked investors in the short term, ITC’s strong fundamentals, growing FMCG business, and favourable analyst outlook suggest that the dip could be an opportunity for long-term investors. Market watchers will keep an eye on whether the transaction proceeds and how the company navigates its next phase post-hotel demerger.

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