ITC hits new high on heavy volumes; enters Rs 6-trillion market cap club

FPIs increased their stake in ITC to 14.51 per cent at the end of the June quarter, up from 14.21 per cent seen at the end of March quarter

ITC, the cigarettes-to-hotels conglomerate, on Thursday, joined the elite group of companies having market valuation of Rs 6 trillion. Shares of the company hit a new lifetime high of Rs 485.15, gaining 1 per cent on the BSE in the intra-day trade amid heavy volumes.

Around 2.07 million shares of ITC changed hands on the BSE at 09:29 AM. Meanwhile, a combined 6.7 million shares of the company have changed hands on the NSE and BSE till 11:03 AM.

With Rs 6.04-trillion market capitalisation (market cap), ITC now stands at the seventh position in the overall m-cap ranking among the BSE listed companies. Currently, Reliance Industries, Tata Consultancy Services, HDFC Bank, ICICI Bank, Hindustan Unilever, and Infosys have market cap over Rs 6 trillion.
 

Thus far in the calendar year 2023, the stock price of ITC has appreciated 46 per cent on continued buying by the foreign portfolio investors (FPIs). In comparison, the S&P BSE Sensex was up 9.6 per cent during the period.

FPIs raised their ownership of the company in the most recent quarter, keeping in mind the positive prognosis for earnings growth.

At the end of the June 2023 quarter, the total holding of Category-I & II FPIs had increased to 14.51 per cent. They held 14.21 per cent stake in March 2023 quarter, while it was 13.81 per cent in December 2022 quarter and 13.47 per cent at the end of September 2022 quarter.

ITC is the biggest cigarettes & second largest FMCG company in India with around 80 per cent market share in cigarettes and presence in staples, biscuits, noodles, snacks, chocolate, dairy products & personal care products. The company is also present in paperboard, printing & packaging business, agri and hotels businesses.

ITC has said that its FMCG businesses continue to expand their export footprint, leveraging the equity of their worldclass brands – with a reach now spanning over 60 countries. The PLI scheme has provided further fillip to the company’s exports across Biscuits & Cakes, Snacks, Dairy and Ready-to-Eat categories.

"ITC’s valuation re-rating has been a factor of the conducive setting in the cigarettes business and profitable growth across other segments," analysts at Emkay Global Financial Services said while maintaining a positive outlook.

They see a K-Shaped recovery in ITC's 'Other FMCG' business. Value unlocking in Hotels operations is a near-term catalyst, they said.

ITC continues to witness strong volume growth in the cigarette business, largely gaining share from contrabands and illicit cigarettes. Analysts at ICICI Securities believe stable taxation in cigarettes as well as strong traction in high priced cigarettes have been leading to high volume growth (~19 per cent in FY23) as well as market share gains. "Despite strong run up in the stock, it is still trading at attractive multiples compared to other FMCG companies. We remain positive on long term growth outlook for the company," the brokerage firm said.

A broad-based fall in raw material/ commodity prices is expected to provide a further respite to consumer companies during Q1FY24, and subsequently may also aid rural demand in the coming months. Going ahead, moderating inflation, coupled with a pick-up in monsoon, should help rural demand recover, analysts at Antique Stock Broking said in recent FMCG sector report.