FMCG giant ITC is the shining star of 2023, at least so far. The stock has outperformed not only peers but also the broad benchmark and posted double digit growth year-on-year. ITC on Tuesday narrowed the gap between itself and rival Hindustan Unilever (HUL) by becoming the sixth largest company in terms of market cap. ITC has left behind IT and NBFC giants Infosys and HDFC.
ITC shares closed on BSE 411.35 each up 0.7%. The stock touched a new 52-week high 413.45 in the first day.
Market cap of ITC at the end of trading session on 25 April 5,11,226.51 crores. increased over m-cap 3,500 crore from the previous season. with this, ITC climbed the ladder to become India’s sixth largest company in terms of market cap.
Before Tuesday’s performance, the title of the sixth largest company was held by Infosys, although this has now changed.
Infosys slipped to seventh position with a market cap of 5,08,011.92 crore at present. The stock closed with a slight decline 1224.55 on BSE at Rs. Infosys shares are under pressure after the weak fourth quarter results.
Last week, ITC outperformed HDFC’s market valuation.
Currently HDFC’s m-cap is close to 5,05,558.17 crore — Holding the title of the eighth largest company.
This left ITC behind HUL, which is currently the fifth largest Indian firm and the largest FMCG company by market capitalisation. 5,85,048.22 crores.
But unlike ITC, HUL’s share price performance has been lackluster so far this year. YTD, ITC shares have gained 24%, in contrast, HUL’s stock has declined around 3% year to date. Besides, Infosys plunged 20% YTD, and HDFC saw nearly 4% upside.
According to Bloomberg data, ITC’s one-year return would be around 67.60 per cent. Nearly 95% of analysts have a ‘Buy’ recommendation on ITC.
ITC is one of the top picks amid Q4 earnings season.
Brokerage Sharekhan has a ‘Buy’ recommendation for a target price of Rs. 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 revenue to grow by 13% aided by 10-11% volume growth, while non-cigarette FMCG business is expected to grow by 19%. Hotel business is expected to grow by 70% year-on-year due to continued strong demand. The paper business is expected to grow at a rate of 15%, while the agri-business is expected to decline by 30%.
ITC’s growth prospectus for FY24 is also good. Sonam Srivastava, Founder, Wright Research on ITC said, “Both the cigarette and FMCG segments are expected to witness double-digit earnings growth in FY24, driven by healthy margin recovery in the FMCG business. Compared to other consumer staples firms, ITC’s valuations remain attractive. , even at the current all-time high, makes it a strong choice for investors.”
“The hotel business could benefit from the company’s focus on management contracts, which should improve return ratios and signal value unlock to investors,” Srivastava said. Paperboard and agri business is also expected to do well, driven by factors such as improving raw material costs and government policies. Overall, ITC’s upward trajectory and strong performance in core businesses such as cigarettes and FMCG indicate a bright future for the company.”
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