The world's third-most valuable firm is ITC, replacing British American Tobacco.
After a share sale at the London-based company on Wednesday, ITC Ltd surpassed British American Tobacco (BAT) in terms of market capitalization, moving up to third place among tobacco companies globally.As the trading day came to a close at the London Stock Exchange, BAT had a market cap of £51.58 billion, or approximately $64.9 billion; in contrast, ITC, which has expanded its business beyond tobacco to include fast moving consumer goods (FMCG), hotels, papers, and agri-products, had a market cap of $68.6 billion.
In 1910, under the name Imperial Tobacco Co of India Ltd, it started its voyage as a subsidiary of the British parent company from a rented office in central Calcutta's seedy Radha Bazar Lane.
Sixteen years later, and fifteen years after the capital of British India was transferred from Calcutta to Delhi, the business bought a piece of land on Chowringhee and relocated its offices to the spot where ITC's current headquarters, Virginia House, are located.
The name was changed from India Tobacco Company Limited in 1970 to I.T.C. Limited in 1974 as the company's ownership steadily became Indian.
In 1902, American Tobacco Co. Ltd. of the United States and Imperial Tobacco Co. Ltd. of the United Kingdom founded BAT Plc. Today, BAT Plc maintains a sizable stake in ITC Ltd. of India. Through its three subsidiaries, BAT owns a 29.04% interest in ITC, which is worth $19.9 billion.
The market valuation of ITC, the maker of Lucky Strike and Dunhill brand of cigarettes, is about one-third of what BAT's stake in the company is. A foreign direct investment is what BAT's stake in ITC is. However, BAT's options in India are limited due to the country's prohibition on foreign direct investment in tobacco industries. ITC has BAT as one of its publicly disclosed shareholders. It is represented on the board by two individuals.
Trend Diversified
For some time now, ITC stock has been rising, much exceeding the market as a whole. As a result of investors' continued faith in the company's diversification strategy, increasing profitability in the fast-moving consumer goods (FMCG) business, rising cigarette volume growth, and a comeback in the hotel segment, the stock has risen 34.7% in a year and 125.5% in three years.
Just 37% of ITC's gross revenue for the six months ending September 30, 2023 came from the tobacco division. It did, however, constitute 78% of the company's profit before taxes.
On the other hand, BAT fell to multi-year lows on Wednesday as the corporation wrote down the value of some US cigarette brands, costing $31.5 billion. In London, BAT stock dropped as low as 10%, its lowest level since September 2010. On Thursday, it increased somewhat.
Reuters reported on Wednesday that a multinational tobacco giant has written down the value of its traditional cigarettes business in a key country like the United States. This is the first time such a write-down has occurred, and it emphasises the necessity for the industry to focus on alternatives.
As a result of rising consumer awareness and increasingly stringent health restrictions, several multinational tobacco companies are shifting their focus to non-combustible products, such as vape. Until 2035, BAT plans to rely on sales of non-combustible products for half of its revenue.