ITC 7th firm to cross Rs 6 trillion in market cap ITC on Thursday became the seventh company to cross Rs 6 trillion in market value. The scrip gained 2.8% to close at Rs 492.15, after touching a fresh high of Rs 493.50. The stock has given returns of 48.4% on a year-to-date basis, with market cap rising Rs 2.01 trillion since then. It has gained 65% in the last one year, and more than 155% in the last three. It attributes the same to multiple factors, the first being strong volume growth in cigarettes led by market share gains and new product launches. A ramp-up in outlet coverage, effective implementation of the localisation strategy, premiumisation, leveraging of technology on demand and supply side, and moderating raw material input costs — have led to improving Ebit margins. Further, the hotels business has seen an uptick with travel, wedding, and corporate activities reviving (possible demerger of hotels will only boost profitability). Finally, the steady performance in paperboard and agribusiness in FY23 has also strengthened fundamentals. ITC’s journey from the Rs 3 trillion to Rs 4 trillion m-cap mark took three years, while that from Rs 4 trillion to Rs 5 trillion took six years. However, it took just three months to scale the journey to Rs 6 trillion. RIL, TCS, HDFC Bank, ICICI Bank, HUL, and Infosys are the only other companies to have crossed Rs 6 trillion in market value. “HUL’s market cap is now just 4% higher than ITC. We expect ITC to soon edge ahead. Having gone up more than 50% in 1 year, ITC remains a ‘buy’. Value unlocking in the hotels business has been one of the drivers, apart from decent growth in cigarettes, FMCG, and hotels. The rational tax policy for cigarettes has also been a boon for ITC,” said Abneesh Roy, executive director, Nuvama Institutional Equities.
The Japanese pharma major is also filing a plea before the Delhi HC seeking appointment of forensic auditors to analyse transactions involving IHH, Fortis Healthcare and RHT, Singapore, as directed by the HC on October 18.
The development is likely to create legal hurdles and delay the proposed open offer as IHH had recently told FE that it could only go ahead if Sebi agreed with its legal interpretation that the SC’s September 22 order has lifted all such restraints.
IHH managing director and CEO Kelvin Loh told FE on November 9 that the company would like to go ahead with the open offer “as soon as possible” as there has already been a delay of four years. Ravi Rajagopal, chairman of Fortis Healthcare, had added that their legal counsel has advised that the company can go ahead with the open offer as the SC order has disposed of various appeals, including the suo motu contempt. “We have represented to the Sebi and the matter is with them,” Rajagopal had said.
However, legal observers told FE that the matter is not that straightforward and simple as the Delhi HC has to take the final call on the matter of open offer as well as whether a forensic audit has to be done in the share sale which was executed in 2018.
Also Read: IHH to float open offer for Fortis if Sebi concurs with our legal view: MD & CEO
Loh and Rajagopal had said the possibility that the matter may take a different turn when it comes up in Delhi HC cannot be ruled out.
IHH had in July 2018 acquired a 31% stake in Fortis Healthcare for Rs 4,000 crore through the bidding route. It had also earmarked Rs 3,000 crore to make an open offer for an additional 26% to the public shareholders as required under the law.
Daiichi has written to Sebi that the SC in its September 22 order had asked the HC to consider ordering a forensic audit into the dilution of FHL shareholding, repeated violation of undertakings and assurance by former FHL promoters — Malvinder and Shivinder Singh — and the transaction between FHL, IHH and the clandestine transfer of Rs 4,666 crore to RHT Singapore.
Daiichi is “severely prejudiced” with IHH’s clandestine attempt to subvert the status quo order directed by the SC on December 14, 2018, and September 22 with respect to the conduct of forensic audit and the pending proceedings before the HC by purportedly consulting regulatory authorities, including Sebi, on the proposed FHL-IHH transaction. It has reiterated that the FHL-IHH transaction was currently sub-judice before the HC where FHL is also a party, its solicitors, P&A Law Offices, have said in the letter.
“We further state that any such attempt by FHL and/or IHH to proceed with the FHH-IHH transaction would be in direct contravention of the HC and SC orders,” the letter sent by the law firm has stated. Daiichi Sankyo is pursuing the enforcement of Rs 3,500-crore arbitration award against the Singh brothers pronounced by a Singapore tribunal for concealing information when they sold Ranbaxy Laboratories to it for $4.6 billion in 2008. The apex court had in 2018 put on hold the sale of Fortis Healthcare to IHH on a contempt plea filed by the Japanese drugmaker against the Singh brothers.