Plan to offload Indian stake lights up BAT

BRITISH American Tobacco shares gained the most in nearly four years after it revealed it was looking to dump some of its £15bn stake in India’s largest cigarette firm.

The Lucky Strike and Dunhill maker said it planned to offload a chunk of its 30pc holding in ITC.

BAT chief executive Tadeu Marroco said the potential sell-off ‘offers us the opportunity to release and reallocate some capital’.

The company has owned a stake in ITC for over 100 years and the shareholding has been subjected to numerous regulatory restrictions, he added.

The prospect of a sell-off sent the shares up amid hopes that it will free up cash to hand out to investors.

The stock ended the day up 7.1pc, or 165p, at 2484p.

BAT last launched a £2bn share repurchase programme in February 2022 but decided not to renew it last year.

‘This would be a big positive, bringing the all- important share buyback timeline closer for investors,’ said RBC Capital Markets analyst James edwardes Jones.

Rival Big Tobacco players have been looking to sweeten investors.

London- listed Imperial Brands has an ongoing £1.1bn share buyback scheme, while Altria announced an £800m buyback last week.

BAT’s rally came as it posted a loss of £ 15.8bn for 2023 against profits of £10.5bn the previous year. It followed a £27.3bn writedown on US cigarette brands.

The company said in December that Camel, Natural American Spirit, Newport and Pall Mall – brands acquired in a £40bn takeover of the cigarette giant Reynolds American in 2017 – are worth far less than anticipated.

Yet the charge was higher than the £25bn hit it originally warned of.

The company blamed this on currency movements. Cigarette firms in general have suffered as consumers shift towards vapes.

Revenues at BAT were £27bn for the year, down 1.3pc from the year before.

Its ‘ smoke- free’ business, which includes vapes and nicotine pouches, was profitable for the first time, raking in £398m.

Sales of BAT’s vape products rose about 7pc in 2023 while nicotine pouch sales climbed by more than a third.

It looked to stub out concerns surrounding the UK’s incoming disposable vape ban, which is aimed at tackling the rise in young people vaping.

Marroco said this would not have a huge impact thanks to his firm’s refillable vape products including Vuse.

‘Because we have a modest share in disposable vapes, we would be in a stronger position, because we are leaders in refillable,’ he said.

Looking ahead, BAT said global tobacco sales are expected to be down 3pc, driven by a weak performance in the US.