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Published: June 17, 2023
Updated: June 17, 2023

ITC Surges to New High, Approaches Rs 6 Trillion Market Cap Milestone

ITC, a diversified fast-moving consumer goods (FMCG) company, achieved a significant milestone as its shares reached a new high and its market capitalization approached the Rs 6 trillion mark. The company's strong performance has outpaced the market for eight consecutive months, reflecting investors' confidence in its growth prospects. With a dominant presence in various consumer product segments, ITC has emerged as a key player in the FMCG industry.

ITC's Impressive Stock Performance:

Shares of ITC recorded a gain of 1.4 percent, reaching a new high of Rs 453.90 during Friday's intra-day trade. This surpasses its previous high of Rs 452, which was achieved on May 31, 2023. The stock has exhibited remarkable growth, rallying 37 percent year-to-date, while the S&P BSE Sensex rose by 3.8 percent over the same period. This consistent outperformance has contributed to ITC's growing market capitalization.

Approaching the Rs 6 Trillion Milestone:

ITC's market capitalization currently stands at Rs 5.63 trillion, inching closer to the significant Rs 6 trillion milestone. With a difference of less than 7 percent, the company is poised to join the league of FMCG giants. Hindustan Unilever, another prominent FMCG company, currently boasts a market capitalization of Rs 6.32 trillion. This upward trend reflects the positive sentiment surrounding ITC and its potential for further growth.

ITC's Diversified Business Portfolio:

As the largest cigarette manufacturer and the second-largest FMCG company in India, ITC holds an impressive 80 percent market share in cigarettes and operates in diverse sectors such as staples, biscuits, noodles, snacks, chocolate, dairy products, and personal care. The company's presence also extends to paperboard, printing, packaging, agri-business, and hotels. This diverse portfolio contributes to ITC's resilience and stability.

Positive Outlook and Analyst Recommendations:

Leading brokerage houses express bullishness towards ITC due to strong revenue growth across its businesses in the financial year 2022-23. The company has successfully mitigated input cost inflation through sourcing efficiencies, premiumization, supply chain optimizations, and pricing strategies. Analysts at ICICI Securities note that stable taxation in the cigarette segment and increased demand for higher-priced cigarettes have driven volume growth and market share gains.

Attractive Valuations and Growth Potential:

Despite the stock's impressive run, ITC continues to trade at attractive multiples compared to its FMCG counterparts. Analysts highlight the company's long-term growth outlook and maintain a positive stance. The target price for the stock has been revised to Rs 500 per share, reaffirming the "buy" recommendation. The potential for margin expansion and leveraging strong brands into new food adjacencies further bolsters the positive outlook for ITC.

ITC's remarkable surge to a new high and its close proximity to the Rs 6 trillion market capitalization mark reflect its robust performance and growth trajectory. With a strong presence in various FMCG segments, the company has captured the market's attention and investor confidence. Analysts remain optimistic about ITC's long-term growth prospects, supported by revenue growth, margin expansion, and attractive valuations. The FMCG sector's positive volume growth, coupled with moderating input costs and retail inflation, is expected to sustain the industry's recovery.