ITC | Mango Bunch

Foreign investment in FMCG stocks climbs in the initial half of March

Sneha Sengupta — Thu, 21 Mar 2024 16:36:50 +0000

According to data from National Securities Depository Ltd (NSDL), foreign investors gorged on FMCG (fast-moving consumer goods) equities in the first half of March, with net purchases reaching a four-year high of ₹11,180 crore. In contrast, during the same time the previous year, the amount was ₹662 crore.

The figures were mostly influenced by the ₹3,664.1-crore purchase of 91.5 million ITC shares by sovereign wealth fund GIC (Government of Singapore Investment Corporation), which were offloaded by British American Tobacco (bat) on the stock exchanges over the two-week period.

“FIIs are long-term investors and the correction in FMCG stocks afforded them a good opportunity to pick them up at attractive valuations,” stated S.K. Joshi, ED, Khambatta Securities.

The Nifty FMCG index dropped -0.12% to 53,338.35 points during the first half of the month, while the Nifty slid -1.4% to 22,011.95 points.

Between March 1 and March 21, the price of an ITC share increased to ₹421.25 from ₹409.50, the price of a HUL share decreased to ₹2,242.35 from ₹2,409.70, and the price of a Nestle India Ltd share decreased to ₹2,553.65 from ₹2,601.45.

“Discretionaries in the premium portfolios should continue to do well. Margins are likely to improve for staples and discretionaries, aided by favourable input prices (primarily due to steady crude-oil prices). Competition, though, is expected to be intense across staples and discretionaries, on aggression by smaller companies in FMCG and existing/new entrants in paints/beers,” according to Anand Rathi in a report.

The price of an ITC share increased to ₹421.25 from ₹409.50 between March 1 and March 21, while the price of a HUL share decreased to ₹2,242.35 from ₹2,095.Moreover, foreign investment poured into other industries, bringing in ₹6,648 crore for telecommunications, ₹5,365 crore for financial services, ₹4,697 crore for services, ₹4,117 crore for consumer services, and ₹4,031 crore for real estate.

For the next three fiscal years (FY24–FY26), the research estimates a 13% compound annual growth rate (CAGR) in earnings for FMCG companies.

According to data from NSDL, other industries that received significant inflows of foreign investment included construction (₹633 crore), metals & mining (₹275 crore), capital goods (₹2,838 crore), and automotive and auto components (₹3,697 crore).

In contrast, the share price of Nestle India Ltd. dropped to ₹2,553.65 from ₹2,601.45 during the same period, and foreign investors were net sellers in a number of sectors, including healthcare (₹1,577 crore), oil, gas & consumable fuels (₹1,110 crore), information technology (₹1,104 crore), construction materials (₹271 crore), and consumer durables (₹167 crore). For the next three fiscal years (FY24–FY26), the research estimates a 13% compound annual growth rate (CAGR) in earnings for FMCG companies.

Bulk deals: After BAT’s equity sale, Singapore govt, ICICI Prudential acquires ITC stake

Sneha Sengupta — Wed, 13 Mar 2024 17:16:26 +0000

Tobacco Manufacturers India, a British American Tobacco (BAT) subsidiary, sold 43.68 crore shares at Rs 400.25 each, or 3.50 percent of the company’s ownership. Tobacco Manufacturers, which owned 23.87 percent of ITC till December 2023, sold equity valued at Rs 8,742.48 crore.

On March 13, BAT completed a block agreement to sell $2 billion, or Rs 16,775 crore, in the company. By the end of December 2025, BAT intends to repurchase its own shares with the money raised from the stake sale.

At Rs 400.25 per share, ICICI Prudential Mutual Fund acquired 59.26 lakh shares, or 0.04 percent of the total.

At an average price of Rs 400.25, the Singaporean government purchased 9.15 crore shares, or 0.73 percent of the total.

On March 13, ITC’s shares on the BSE soared 4.49 percent to Rs 422.40.

Quantum Growth Partners LLP purchased 1.06 lakh shares, or 0.55 percent of Markolines Pavement Technologies, at an average price of Rs 139.79.

At Rs 140 per share, investor Prakash Pai Peraje sold 96,000 shares, representing 0.50 percent of the total.

On the BSE, Markolines Pavement Technologies’ shares dropped 6.5% to Rs 131.

At an average price of Rs 1601.1, New World Fund Inc. purchased 27.89 lakh shares, representing one percent of APL Apollo Tubes. Principal Global Investors Collective Investment Trust, a foreign portfolio investor, sold 15.31 lakh shares, or 0.55 percent of the company, at an average price of Rs 1,600.16.

On the NSE, APL Apollo Tubes’ stock dropped 6.66 percent to Rs 1,486.5.

Polaris Banyan Holding purchased an additional 2.96 lakh shares, or 0.66 percent of Indian Terrain Fashions, at an average price of Rs 78.94. On March 12, Polaris purchased 3.05 lakh shares of the business.

Shantiram Kutumbkam Food Services purchased 15.52 lakh shares, or 0.70 percent of Ruchi Infrastructure, at an average price of Rs 10.5. At Rs 10.5 per share, promoter Patanjali Foods sold 15 lakh shares, or 0.68 percent of the total.

At a price of Rs 2.9 per share, Goldman Sachs (Singapore) PTE purchased 55 lakh shares of South Indian Bank RE.

BAT seeks to sell off 3.5% of ITC through a block trade

Sneha Sengupta — Tue, 12 Mar 2024 15:40:58 +0000

BAT PLC disclosed on Tuesday that it intends to use a block trade to sell institutional investors up to a 3.5 percent interest in India’s ITC Ltd.

Subject to customary closing circumstances, BAT intends to sell up to 43,68,51,457 common shares in ITC Ltd (ITC) through its wholly-owned subsidiary, Tobacco Manufacturers (India) Ltd (TMI), through an expedited bookbuild process (block trading).

BAT’s first investment in ITC dates back to the early 1900s, which signifies the beginning of a long-lasting and mutually beneficial partnership between the two businesses.

Moreover, the ITC statement added that BAT will continue to own a significant ownership interest in ITC, with a 25.5% ownership holding, following the conclusion of the planned block trade.

The business intends to use the net proceeds from the block deal to repurchase BAT shares through December 2025, according to the announcement. The process is scheduled to start in 2024 with £700 million.

“I am confident that ITC, under the stewardship of its current management, will continue to create further value for its shareholders. We look forward to remaining important shareholders in ITC as it continues its journey of growth,” BAT Chief Executive Tadeu Marroco stated.

The entire value of the ITC shares that BAT plans to sell is roughly ₹17,659.72 crore, based on Tuesday’s closing price of ₹404.25 per share.

Marroco continued, “With this transaction BAT can accelerate the start of a sustainable buyback, while enabling us to continue to deleverage towards a new target range of 2-2.5x adjusted net debt/adjusted EBITDA.”

“ITC is a valued associate of BAT in an attractive market with long-term growth potential where BAT benefits from exposure to the world’s most populous market,” the company added.