Bull run shows ITC is still a cigarette stock

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Editor's note: The top question on everyone’s mind is whether ITC will pip Hindustan Unilever's valuation yet again. Despite a visible slowdown in the earnings of consumer goods companies, analysts are bullish on the cigarette maker, which has for years tried to push its FMCG business. Is their call misplaced? Even a year ago, the question would have sounded absurd. There seemed little chance that ITC, which made 80% of its profits from cigarettes, was ever going to go past HUL, the leading consumer goods company, after having lost its top slot to it in 2018. A year ago, ITC was valued at Rs 310,000 crore, less than half of HUL’s Rs 644,000 crore valuation then.  And two years ago, analysts were exasperated that the ITC stock hadn’t performed for a decade. The company was diverting all the profits it made in the cigarette business to the foods and hotels business that wasn’t profitable enough to have a say in the stock’s valuation. In February 2020, just before the pandemic struck, the ITC stock had fallen to a seven-year low of Rs …