BackITC beats Infosys after HDFC to become sixth largest company by m-cap, stock rallies 24% in less than 4 months
By the end of the trading session on April 25th, ITC's market cap stood at ₹5,11,226.51 crore. The m-cap rose by more than ₹3,500 crore from the previous session. With this, ITC climbed the ladder to become the sixth-largest company in India in terms of market cap.
PremiumFMCG giant ITC is the shining star of the year 2023 so far at least. The stock has outperformed not just peers but also broader benchmarks and has yielded double-digit growth year-to-date. On Tuesday, ITC reduced the gap between itself and rival Hindustan Unilever (HUL) by becoming the sixth-largest company in terms of market cap. ITC has outrun IT and NBFC giants Infosys and HDFC.
On BSE, ITC's share price closed at ₹411.35 apiece up by 0.7%. The stock touched a new 52-week high of ₹413.45 apiece earlier in the day.
By the end of the trading session on April 25th, ITC's market cap stood at ₹5,11,226.51 crore. The m-cap rose by more than ₹3,500 crore from the previous session. With this, ITC climbed the ladder to become the sixth-largest company in India in terms of market cap.
Prior to Tuesday's performance, the sixth largest company title was held by Infosys, however, that has changed now.
Infosys slid to the seventh rank with a market cap of ₹5,08,011.92 crore currently. The stock ended marginally lower to ₹1224.55 apiece on BSE. Infosys stock has been under pressure after its weak Q4 results.
Last week, ITC surpassed HDFC's market valuation.
At the moment, HDFC's m-cap is around ₹5,05,558.17 crore --- holding the eighth-largest company title.
This led to ITC tailing behind HUL which is currently the fifth Indian firm and largest FMCG player with a market cap of ₹5,85,048.22 crore.
But unlike ITC, HUL's stock price performance has been sluggish so far this year. YTD, ITC shares have rallied by 24%, on the contrary, HUL's stock has dipped by nearly 3% so far. Also, Infosys dipped by 20% YTD, and HDFC has seen a nearly 4% upside.
As per Bloomberg data, 1-year return of ITC would be around 67.60%. Nearly 95% of analysts have set a 'buy' recommendation on ITC.
ITC is among the top picks amidst the Q4 earnings season.
Brokerage Sharekhan has set a 'BUY' recommendation for a target price of ₹450 on ITC. In its preview note, the brokerage said, discounted valuations and improved earnings visibility make ITC a better pick among large consumer goods companies.
In Q4FY23, Sharekhan expects ITC's cigarette business revenues to be up by 13% y-o-y aided by 10-11% volume growth, while non-cigarette FMCG business is expected to grow by 19% y-o-y. The hotel business is expected to grow by 70% y-o-y aided by sustained strong demand. Paper business is expected to grow by 15% y-o-y, while Agri-business is likely to decline by 30% y-o-y.
ITC's growth prospectus is healthy for FY24 as well. Sonam Srivastava- Founder at Wright Research on ITC said, "Both the cigarette and FMCG sectors are expected to witness double-digit earnings growth in FY24, driven by good margin recovery in the FMCG business. ITC's valuation remains attractive compared to other consumer staples firms, even at the current all-time high, making it a strong choice for investors."
Srivastava added, “The hotel business may benefit from the company's focus on management contracts, which should improve return ratios and signal value unlock to investors. The paperboard and agribusinesses are also expected to perform well, driven by factors such as raw material cost corrections and government policies. Overall, ITC's upward trajectory and strong performance in key businesses like cigarettes and FMCG indicate a bright future for the company."
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