ITC Soars to Third Most Valuable Company in the World, Replacing British American Tobacco
ITC Ltd., the Indian conglomerate, has overtaken British American Tobacco (BAT) as the world’s third most valuable tobacco company. This follows a sell-off in BAT shares on Wednesday, which coincided with a rise in ITC’s market capitalization.
From its humble beginnings as a leased office in Calcutta, ITC has evolved into a diversified giant. Now a major player in FMCG, hotels, paper, and agri-products, its market capitalization reached $68.6 billion on Thursday, surpassing BAT’s $64.9 billion.
Despite BAT holding a significant 29.04% stake in ITC, India’s ban on FDI in tobacco companies limits its options. This contributed to BAT’s share price slump, which reached multi-year lows on Wednesday. The company took a $31.5 billion hit after writing down the value of some of its US cigarette brands, highlighting the industry’s need to focus on alternative products like vaping.
In stark contrast, ITC’s stock has been on a remarkable trajectory. It has outperformed the broader market by a wide margin, gaining 34.7% in one year and 125.5% in three years. This surge is attributed to investor confidence in ITC’s diversification strategy, rising profitability in the FMCG business, volume growth in cigarettes, and a revival in the hospitality segment.
While tobacco still accounts for a significant portion of ITC’s profits, its diversification efforts are proving successful. The tobacco business now represents only 37% of gross revenue, showcasing the company’s expansion into other sectors.
This shift marks a significant moment for India’s corporate landscape. ITC’s rise highlights the growth potential of Indian companies and their ability to compete on the global stage. With its diversified portfolio and strong performance, ITC is well-positioned for continued success in the years to come.
