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