British American Tobacco (BAT) will wait for the ‘right moment’ to divest its stake in ITC Hotels Ltd to maximise shareholders’ value, the company’s CEO said on Thursday.

The London-headquartered tobacco major holds a 15 per cent stake in ITC Hotels, which was demerged from ITC Ltd and listed on the bourses last month. Going by the closing price today, BAT’s stake in ITC Hotels is valued about ₹5,300 crore, or £486 million.

In response to a question posed by Gaurav Jain of Barclays, BAT chief executive Tadeu Marroco said the company had no plans to remain a “long term” shareholder in a hotel company, adding that the maker of Dunhill and Kent would use the money to reach the desired leverage (adjusted net debt to adjusted EBITDA).

“BAT has no interest to become a long-term shareholder of a hotel chain in India…as a consequence, we will divest (the stake in ITC Hotels) when we decide to maximise shareholders’ value,” Marroco said at an analyst meet after the announcement of its financial results for 2024.

Last year, BAT sold a 3.57 per cent stake in ITC Ltd for £1.57 billion which allowed the company to resume its share buyback plan in deference to the wishes of several large shareholders. BAT’s buyback stood at £700 million in 2024; it plans to ramp it up to £900 million in 2025.

Despite returning money to the shareholders through the share buyback and dividend, BAT’s net debt fell to £31.25 billion in 2024 from £34.64 billion in 2023.

“We have continued to reduce our leverage and closed the year within our target range, with an adjusted net debt to adjusted EBITDA ratio of 2.44x, or 2.75x excluding the provision for cash, cash equivalents and investments held at fair value in Canada,” Soraya Benchikh, chief financial officer of BAT, said.

Marroco spelt out how he intended to use the funds from the stake sale in ITC Hotels. “We will use the proceeds to make sure that we get to the leverage corridor of 2-2.5 by 2026,” he said at the analysts’ call.

BAT holds a 25.45 per cent stake in ITC after the share sale. It became a shareholder of ITC Hotels following the demerger process in which ITC Hotels issued equity shares directly to the shareholders of ITC in such a manner that ITC Ltd holds a 40 per cent stake while the rest has devolved to the ITC shareholders in proportion to their holding.