ITC surpasses HDFC's m-cap to become 7th most valued listed company

Fast moving goods company (FMCG)-to-Cigarette major ITC became the seventh most valued listed company on Friday, as it surpassed home loan major Housing Development Finance Corporation (HDFC) in terms of market capitalisation (m-cap).

Shares of ITC hit a new of Rs 405.90, up 1.4 per cent on the BSE in the intra-day trade today. At 12:26 pm, the S&P BSE Sensex was down 0.12 per cent at 59,560.

With a market cap of Rs 5.04 trillion, ITC stood at seventh position in the overall m-cap ranking, pushing HDFC slipped to eighth position whose market cap was Rs 5.03 trillion, data shows.

Thus far in calendar year 2023 (CY23), ITC has outperformed the market by surging 22 per cent, as compared to 3 per cent decline in the S&P BSE Sensex. HDFC, meanwhile, has gained 2.4 per cent during the same period.

ITC is one of the largest diversified players in India, present in businesses such as cigarettes, fast moving consumer goods (FMCG), hotels, and paper.

ITC has delivered resilient performance in the past few quarters, despite an uncertain demand environment and sustained inflationary pressures on margins. The resilient performance was driven by good recovery in its core cigarette business (in the post Covid era), steady double-digit growth in the non-cigarette FMCG business, and accelerated growth in the hotel, and paperboard, paper and packaging (PPP) business.

Centrum Broking believe ITC is well positioned for long term value creation led by, stability in tobacco taxation, healthy volume growth in cigarettes despite 3 per cent price hikes in King Size Filter Tip (KSFT) portfolio, solid underlying performance in Foods driving profitability, improving outlook and potential demerger for the Hotel business and resilient momentum in the paper business.

"Further, augmented distribution for FMCG-foods business and cigarettes is helping to capture market share. Favourable input RM/PM prices will show up in strong earnings visibility for most businesses including FMCG-Foods," the brokerage firm said as it maintained a 'BUY' call with a target price of Rs 470 (implying 28.5x avg. FY24/FY25E EPS).

Analysts at HSBC Securities and Capital Markets, too, expect cigarette momentum to sustain in Q4, with double-digit volume/value growth. FMCG-Other, it said, may deliver mid-teens sales growth, and Hotels are likely to grow at ~60 per cent YoY on a weak base. Margins are likely to improve in YoY terms.

Analyst at BNP Paribas also expect the cigarette business to grow 11 per cent YoY, with volume growth of 9 per cent YoY (base volume growth of 9 per cent YoY), aided by a stable mobility and prices. The brokerage firm expects YoY improvement in Ebitda margin, backed by strong sales performance of cigarettes, a strong recovery in the hotel business and benefits of easing raw-material prices in its FMCG business.