News

Published: July 20, 2023
Updated: July 20, 2023

ITC Surpasses Rs 6 Trillion Market Cap Milestone Amid Rising FPI Interest

ITC, the diversified conglomerate spanning cigarettes to hotels, has achieved a significant milestone by crossing the coveted Rs 6 trillion market valuation mark. Bolstered by a surge in foreign portfolio investors (FPIs) interest, the company's stock price soared to a lifetime high of Rs 485.15 on the BSE. Let's delve deeper into the factors driving this impressive growth and the outlook for ITC in the market.

Rising FPI Interest Fuels ITC's Soaring Valuation:

Foreign portfolio investors (FPIs) have been increasingly showing confidence in ITC's potential, leading to a remarkable 46% appreciation in its stock price in the calendar year 2023. The positive prognosis for earnings growth has fueled FPIs to raise their stake in the company, reaching 14.51% by the end of the June 2023 quarter.

ITC's Strong Market Position and Business Diversification:

With approximately 80% market share in cigarettes and being the second-largest FMCG company in India, ITC has established a dominant presence in various sectors, including staples, biscuits, snacks, dairy products, and personal care items. Moreover, the company's expansion in the export market, covering more than 60 countries, has been aided by the PLI scheme across Biscuits & Cakes, Snacks, Dairy, and Ready-to-Eat categories.

Analysts' Positive Outlook on ITC's Growth:

Emkay Global Financial Services analysts highlight ITC's favourable valuation re-rating, underpinned by its conducive setting in the cigarettes business and strong growth across other segments. They also anticipate a K-shaped recovery in ITC's 'Other FMCG' business, with potential value unlocking in its Hotels operations.

Cigarette Business and Market Share Gains:

ITC's cigarette business has witnessed robust volume growth, attributing it to its ability to gain market share from contrabands and illicit cigarettes. Strong traction in high-priced cigarettes, combined with stable taxation, has contributed to high volume growth (approximately 19% in FY23). Despite the stock's impressive run-up, it continues to trade at attractive multiples relative to other FMCG companies, earning a positive outlook from ICICI Securities.

Positive Outlook for Consumer Companies in Q1FY24:

Consumer companies, including ITC, are poised to benefit from a broad-based fall in raw material and commodity prices during Q1FY24. This, coupled with the pick-up in monsoon and moderating inflation, is expected to support rural demand, indicating a positive trajectory for ITC in the coming months.

ITC's remarkable achievement of surpassing the Rs 6 trillion market cap milestone is a testament to its robust business diversification and market position. The rising interest from foreign portfolio investors and positive outlook from analysts signal a promising future for the company. With its continued growth in the export market, steady expansion in various segments, and focus on value unlocking, ITC remains an attractive prospect for investors seeking long-term growth opportunities in the Indian market.