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ITC Ltd is likely to spin off and list its wholly owned software services business in the coming months at a valuation of 20,000-25,000 crore, a person familiar with the matter said, requesting anonymity.

ITC Infotech provides technology solutions and services to enterprises across industries such as banking and financial services, healthcare, manufacturing, consumer goods, and travel and hospitality through a mix of traditional and newer business models.

Earlier in the day, CNBC TV18 reported, citing unnamed people, that the board of ITC is expected to meet soon to consider a demerger of ITC Infotech. The company is likely to appoint bankers to explore options for the demerger, according to the report.

“ITC Infotech is a separate entity and a wholly owned subsidiary of ITC," a spokesperson for ITC said in an emailed response to queries. An email sent to ITC Infotech remained unanswered till press time.

ITC Infotech, a mid-cap software services company, has benefited from the pandemic-induced surge in digital demand, much like its peers.

Analysts believe a potential IPO could be a turning point for ITC Infotech. “It (ITC Infotech) has improved its margins which could contribute to its valuation. The company has also strengthened its leadership team. Besides, its focus on large deals and industry 4.0 could really be a game-changer," an industry analyst said on condition of anonymity.

The analyst pointed out that ITC is a conglomerate that has interests in many sectors, including cigarettes, FMCG, hotels and packaging. “An IT services provider can get a better valuation as a standalone unit, which it may not get if perceived to be a unit of a very large conglomerate," he said.

News of the potential listing of ITC Infotech lifted shares of its parent company. ITC, which has barely moved in the past few years, surged more than 4% on Wednesday to close 1.68% higher at 239.50 on BSE, widely outperforming a 0.52% decline in the benchmark index.

ITC Infotech posted revenue of 2,454 crore in FY21.

Bengaluru-based ITC Infotech recently collaborated with Harvard Business School to develop a “unique and industry-defining" productivity framework with professor Prithwiraj Choudhury, Lumry Family Associate Professor at Harvard Business School. ITC Infotech’s Work from Anywhere (I-WFA) framework aims to set the bar for working in the new paradigm of delivering outcomes for both clients and employees, leveraging an efficient and seamless operating framework.

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