ITC market-cap hits Rs 5.5 trn; stock trades higher for 6th straight day

ITC’s market capitalisation (market cap) touched the Rs 5.50-trillion mark as the stock of the cigarette-to-hotel major touched a new high of Rs 443.85, rising 1 per cent on the BSE in Friday's intra-day trade.

With a market cap of Rs 5.51 trillion, ITC now ranks sixth in the overall market cap ranking, according to the data from BSE. In comparison, the S&P BSE Sensex was up 0.36 per cent at 62,098 at 10:01 AM.

The stock of the biggest cigarettes & second largest fast moving consumer goods (FMCG) company was trading higher for the sixth straight day, gaining 6 per cent. Thus far in the calendar year 2023 (CY23), ITC has outperformed the market by surging 33 per cent, as against 1.5 per cent rise in the benchmark index.

At the beginning of CY23, ITC’s market-cap stood at Rs 4.12 trillion. It surpassed Infosys, State Bank of India, Housing Development Finance Corporation (HDFC), Bharti Airtel, Adani Enterprises and Life Insurance Corporation of India (LIC) during the period, data shows.

ITC will turn ex-date for dividend on May 30, 2023. Last week, the company’s board recommended a final dividend of Rs 6.75 and special dividend of Rs 2.75 per share for the financial year ended March 31, 2023. The company has fixed May 30, 2023 as the record date for the purpose of determining entitlement of the members for payment of dividend.

ITC has seen strong revenue growth across businesses in the financial year 2022-23 (FY23). The company has also seen margin gains across business segments as the input cost inflation was mitigated by sourcing efficiencies, premiumization, supply chain efficiencies, and pricing strategies.

Analysts at KRChoksey Shares and Securities said they like the company’s ability to deliver a strong topline as well as profitability improvement even in a difficult year. The cigarette business continues to benefit from taking a share away from illicit trade, a stable tax structure, and premiumization. The FMCG business has strengthened its topline and profitability in a year where inflation impacted demand for the industry.

“We like the margin trajectory of the cigarettes, FMCG and hotels business. We expect the margin profile of the packaging business to improve from the dip seen in Q4FY23 driven by new growth vectors, increased value addition and capacity utilization. We revise our EBITDA estimates upward for the FMCG and hotels businesses,” the brokerage said in its March quarter result update. It maintained ‘buy’ rating on ITC with a target price of Rs 492 per share.

Analyst at BOB Capital Markets also expect ITC to sustain its strong growth momentum across categories and accordingly model for a revenue/EBITDA/PAT CAGR of 14 per cent/16 per cent/16 per cent over FY22-FY25.

The cigarettes business continues to deliver double-digit volume growth and market share gains in the absence of competition from illicit trade, even as the recent tax hike is unlikely to dent sales. The FMCG – others segment too has registered healthy growth across markets and portfolios, and we expect margins to improve as input costs soften, the brokerage said. It maintains BUY rating on ITC with a higher target price of Rs 486 (earlier Rs 459).