ITC re-enters list of top-10 most valued firms after stock rises 6%

With market capitalization of Rs 1.95-trillion, ITC stood at number 10th position in overall rankings, BSE data shows

Cigarette major and fast moving consumer goods (FMCG) company ITC has re-entered the list of top 10 most valuable companies after the stock rose nearly 6 per cent to Rs 160 on the BSE on Thursday.

At 02:22 pm, ITC had a market capitalisation (market-cap) of Rs 1.95-trillion, and thus stood at 10th position in overall rankings,  BSE data shows. The company surpassed the government-owned bank, State Bank of India (SBI), which had the market-cap of Rs 1.89 trillion, data shows.

ITC's stock was trading higher for the third straight day, surging almost 9 per cent from the level of Rs 147 on Monday, March 16, 2020. It hit multi-year low of Rs 135 on Friday, March 13, in intra-day deal. In comparison, the S&P BSE Sensex was down 7 per cent, while the S&P BSE FMCG index down 2 per cent during the period.

ITC on Wednesday said that its board has decided to offer 80-85 per cent of its profit after tax (PAT) as dividend to its shareholders, which will be effective from the current financial year. This would be applicable in the medium term.

According to a company notice on updated dividend distribution policy available on its website, the board may declare interim dividend at its discretion. The final dividend may include special dividend as recommended by the board. The new policy can be amended and reviewed as and when required by the board. CLICK HERE TO READ FULL POLICY

Professionally managed names including ITC have seen sharp correction as well, given muted topline show amid a weak demand environment, but are now attractively placed with valuation discount to historical levels. The stock price of ITC has more than halved from its 52-week high level of Rs 310 touched on April 2019.

Analysts at SBICAP Securities see a near term spike in demand for FMCG sector, while there would be negative impact from slowdown in the medium-term. Though long term prospects are intact, it said.

“ITC's loose cigarette consumption could go down while expected surge in cigarette packs to aid volume in near term. In near term, demand slump likely to be negative. The management in media called out aggressive plans for new launches, which may not work out in a tough demand environment”, the brokerage firm said in FMCG sector update.