ITC beats HUL to become the largest FMCG company by Mcap

A 50 percent rally in shares of ITC since the beginning of the year has seen its market valuation surpassing the Rs six lakh crore mark for the first time. In the process, the cigarettes-to-hotel conglomerate has also overtaken the market capitalisation of Hindustan Unilever Limited (HUL).

ITC is currently commanding a market capitalisation of Rs 6.15 lakh crore, which is Rs 1,240 crore higher than that of HUL.

While the buzz on hotel business demerger has been one of the key triggers for a rally in ITC stock, muted volume growth in the recently concluded June quarter has marred investor enthusiasm at the HUL counter. The stock of HUL declined as much as 3 percent in Friday’s trade whereas ITC extended its gains for the fourth session even as the broader market remained weak.

Shares of HUL declined as much as 3.3 percent on Friday after the company’s June quarter numbers missed Dalal Street estimates. The slower growth in volume also weighed investor sentiment. The fall in HUL shares on Friday was the biggest single-day fall over the last six months.

The stellar rally in ITC stock so far this year is followed by a 50 percent surge in 2022. In contrast, shares of HUL have underperformed the benchmark Nifty with a gain of nearly two percent. The benchmark Nifty50 has gained 9.2 percent between January and now.

Analysts at Jefferies expect the HUL stock to trade lower in the near term as recovery takes time due to macro headwinds. Moreover, the volume growth pick-up is expected to be gradual.

The company reported five-quarter low volume growth of three percent as the food segment stayed flat. The foreign brokerage, which downgraded the stock to “Hold” from “Buy”, observed, “Outlook is cautious as recovery will take time due to macro headwinds and volume growth pick-up will be gradual.”

While close to 90 percent of analysts who track the ITC stock have a “buy” rating on ITC, the ratio stands at 73 percent for HUL.