ITC surpassed BAT in market capitalization to reclaim its position as the world’s third largest tobacco company. Photo credit: BrandySolomon73, CC4.0
India’s ITC Ltd reclaimed its position as the world's third most valuable tobacco company, surpassing British American Tobacco (BAT), reports CNBCTV18. This achievement came as a result of a post-budget relief rally that pushed ITC's share price to a new high of INR510.65 (US$6.10).
BAT is the largest shareholder in ITC with a 26% stake.
Philip Morris International (PMI) holds the top spot with a market capitalization of US$170.3 billion. Altria Group ranks second with a market valuation of US$84.4 billion. ITC, with a market capitalization of US$73.8 billion, stands about $500 million ahead of BAT, according to Bloomberg data.
This isn't the first time ITC has surpassed BAT in market capitalization; it also happened last October. The recent surge in ITC's shares came after the Union budget kept taxes on tobacco products unchanged. The last tobacco tax increase was a 2% hike in February 2023.
Morgan Stanley analysts believe ITC has strong business fundamentals and is well positioned for sustainable growth, making it a strong candidate for re-rating.
ITC expanded its smoke-free portfolio in recent years, similar to its global peers. Consequently, the contribution from its cigarette business has dropped to less than half, down from 62% in FY16. In FY24, the cigarette business contributed 44% to ITC's revenue.