ITC Moves Past HDFC Bank and RIL to No. 2 Spot on M-Cap Chart

The Economic Times - - Companies: Pursuit Of Profit -

Cig­a­rette maker ITC emerged as the sec­ond-most valu­able com­pany in In­dia on Tues­day, with a mar­ket capitalisation higher than that of Re­liance In­dus­tries and HDFC Bank. Soft­ware gi­ant Tata Con­sul­tancy Ser­vices has the high­est mar­ket-cap while HDFC Bank — one of the most ex­pen­sive banking stocks – now oc­cu­pies the third slot fol­lowed by Re­liance In­dus­tries, the coun­try’s largest pri­vate sec­tor com­pany by prof­its.

Af­ter surg­ing 14.8% since Jan­uary 1, ITC shares closed at a new high of 277.10. on BSE on Tues­day. It’s the only cig­a­rette com­pany to oc­cupy the sec­ond po­si­tion in mar­ket-cap rank­ing across the ma­jor global stock in­dices such as Dow Jones, Nikkei and FTSE. At Tues­day’s clos­ing price, ITC was the sixth-largest cig­a­rette com­pany glob­ally by mar­ket capitalisation.

So, what’s fu­elling in­ter­est in ITC? First, the growth in cig­a­rette sales was flat in the De­cem­ber quar­ter — prov­ing the Street wrong which was bet­ting on a dip fol­low­ing de­mon­eti­sa­tion. Sec­ond, in the quar­ter ended De­cem­ber, ITC pushed through a price hike of as much as 14% on key brands such as Gold Flake and Navy Cut to counter a higher ex­cise duty it had ex­pected the Bud­get would an­nounce. What came as a pos­i­tive surprise for share­hold­ers was the 6% hike in duty pro­posed by the fi­nance min­is­ter as against an in­crease of 10% or more im­posed in the past bud­gets.

The val­u­a­tion dif­fer­ence be­tween ITC and FMCG gi­ant HUL has nar­rowed as many fund man­agers bought ITC. The stock alone con­trib­uted 12.5% to Nifty’s gain since the be­gin­ning of the year. This was also an op­por­tu­nity for the gov­ern­ment to rake in 6,700 crore by sell­ing 2% out of the stake it holds in ITC through the Spec­i­fied Un­der­tak­ing of Unit Trust of In­dia (SUUTI).

—Ashutosh R Shyam/ETIG

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