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ITC's market capitalisation overtakes HDFC Ltd: Here's why investors are betting big on this stock

ITC hits all-time high, emerges as best performer on Nifty50: What's driving the stock's steady gains?

21 April 2023

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Kunal Tyagi

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  • Due to its strong success across several industries, including paper, FMCG, and hotels, ITC's market value has overtaken HDFC Ltd, making it the 7th largest company by market capitalization.

  • ITC, which gained 22% between January and the present and contributed over a third of the Nifty50 movement, has emerged as the greatest performer on the index this year.

  • ITC is anticipated to continue outperforming Hindustan Unilever in the short run despite trading at a discount to HUL due to stable growth across industry verticals and a promising outlook for the staple cigarette sector.

ITC has recently been on a roll; its market capitalization has surpassed HDFC Ltd. and it is now the seventh-largest company in terms of market capitalization. Investors' bets on ITC's strong performance across several industries, including paper, FMCG, and hotels, are to blame for this. On Friday, the stock reached a record high of Rs 405.70, representing a 55% increase over the previous year. In contrast, the benchmark Nifty50 has only slightly increased throughout this time—by 1.2%.


ITC is now the sixth most heavily weighted company on the Nifty50, making it the highest performance on the index so far this year. It has gained 22% since January and has alone contributed roughly a third of the Nifty50 movement. In comparison to a year ago, when 77% of analysts recommended buying the stock, over 95% now urge buying it.


Foreign brokerages with 12-month target prices of Rs 450–455 per share include Nomura, Goldman Sachs, and Jefferies. In anticipation of improved capital allocation, a stronger margin trajectory for the FMCG division, as well as possible value unlocking, CLSA has also increased its target price on ITC. Further growing their stakes in ITC, foreign portfolio investors saw their overall holdings rise by 0.4 percentage points to 14.2% during the quarter.


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ITC's stock price has steadily increased over the past year, although it still trades at a significant disadvantage to Hindustan Unilever. While HUL's price-to-earnings multiple is over twice as high at 67 times, ITC's is only 33 times. Analysts predict that ITC will continue to outperform HUL in the foreseeable future due to sustained expansion across all industry sectors and a positive outlook for the staple cigarette business.


ITC is anticipated to post solid double-digit increase in cigarette volumes for the March quarter. On the other side, HUL is exposed to escalating competition due to the emergence of several start-ups and significant retail rivals like Reliance Retail. While holding a dominant position in various markets, HUL's profits growth may be slower than ITC's.


ITC's stockholders have mostly enjoyed themselves, with the stock reaching new highs on Friday. ITC's market capitalization increased by a staggering 63% to more than Rs 5 trillion as a result of the stock's consistent growth over the last year. Experts are still optimistic about the stock and anticipate that it will continue to do well in the foreseeable future.

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