ITC Briefly Dethrones Hindustan Unilever To Become No. 1 Consumer Stock

Asia's largest cigarette maker ITC briefly reclaimed its position as India's most valuable fast-moving consumer goods stock on Monday after ousting Hindustan Unilever (HUL) from the spot.

The Kolkata-based company, which primarily makes money by selling cigarettes but also holds interests in hotels, paper, and consumer staples industries, saw its valuation jump above Rs 6.1 trillion ($74 billion) for the first time ever during the session on Monday, surpassing Hindustan Unilever's Rs 6.09 trillion, before settling lower at Rs 5.9 trillion. 

The cigarette maker has rallied more than 60% in the last 12 months to outperform all other Nifty 50 stocks.

ITC's stock closed 3.9% lower, erasing gains of as much as 1.9% during the day after the company announced plans to demerge its hotel business from itself and retain 40% shareholding in the new entity.

Investors' preference for ITC over Hindustan Unilever is due to the outlook for earnings. While HUL continues to suffer from an anemic post-pandemic recovery in rural Indian sales, ITC's diversified business interests helped boost its earnings per share by about 30% in the year ended March.

"ITC will definitely outperform HUL in the near term," Sachin Bobade, vice president - consumer sector at Dolat Capital Market, said before the demerger announcement. "There is still juice left in ITC mainly because its cigarette business has no major headwind."

ITC's market capitalization last surpassed HUL's four years ago.

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