The tide has turned for cigarette-to-retail conglomerate ITC – and how.

After facing the ire of shareholders over the stock’s underperformance in the past two years, the ITC top management beamed as the plaudits flew at Wednesday’s annual general meeting of the company.

Nearly all shareholders congratulated the Sanjiv Puri-led team for the outperformance of ITC shares, underscoring that the market has finally woken up to the intrinsic value of the business.

The ITC scrip has risen by 44 per cent — it traded at a 52-week high when the chairman and managing director Puri was delivering his speech to the shareholders — amid market corrections that had clawed out investor wealth.

The euphoric mood at the virtual AGM was in stark contrast to the two previous occasions when the management faced severe criticism for not doing enough to unlock value in its sprawling businesses. At that time, Puri had stood his ground and defended his policy of focusing on the businesses instead of worrying about the market’s sentiments against the stock.

“The market is finally appreciating the solid performance of the company,” said a shareholder while heaping praise on Puri and his team of managers, echoing the sentiment in the virtual meet. They also said that the overall dividend of Rs 11.50 per share (face value of Rs 1) had turned ITC into a high dividend yielding stock.

The ITC stock closed at Rs 298.1 today, yielding a one-year return of 44.2 per cent, far outpacing the

benchmark BSE Sensex which has seen a 6.13 per cent increase in its yearly return. In the past six months, the stock has gained 36.7 per cent while the Sensex has lost 6.84 per cent.

In his reply to shareholders’ questions, Puri said the focus of the company would be to ensure that businesses remain competitive.

“Many of you are also happy that the share price has done well. As I have always maintained, the focus of the management is to make sure that the businesses are competitive. We are investing and building businesses for today, tomorrow and the day after,” Puri said.

Concerns over ESG parameters, high taxation on cigarettes and pandemic-led disruption of the hospitality business had weighed on ITC stock prices over the last couple of years.

“We are investing and we are working to make our business such that they continue to grow and demonstrate sustained value accretion over a period of time. That’s the principle. Beyond that, I leave it to the market to determine the valuations,” Puri added.

Some shareholders prodded the company to demerge some of its businesses. Puri said ‘nothing is cast in stone’ and an ‘alternate structure’ had been considered for the hotels business three years back. “Because of the pandemic, we put the plan on the back burner. We have said that in line with the dynamics of an industry recovery, we will take it forward. The industry seems to be in positive trajectory now,” he said.

One of the key reasons for stock performance, analysts pointed out, was the recovery in cigarette volumes. Puri said the cigarette business was now inched ahead of pre-pandemic levels and a ‘relatively stable tax regime is expected to enable the industry to claw back volumes over time. Cigarettes still contributes over 75 per cent of ITC’s profits.

Talking about FMCG business, Puri said the FMCG business has substantial headroom to grow as the addressable segment for the company’s portfolio will reach Rs 500,000 crore by 2030. He also expressed hope that the export of FMCG products would turn into a major revenue stream going forward.