Royal Mail on course for FTSE 100 return

(Sharecast News) - Royal Mail is on course to return to the FTSE 100 index after booming parcel deliveries prompted the company's share price to more than triple in the past year.
The delivery service is the favourite for promotion to the FTSE 100 in the June reshuffle after being demoted in 2017. Royal Mail faces competition from ITV, which dropped out of the index in 2020 as advertising revenue was battered by the pandemic.

Royal Mail's shares have surged to 534.4p at 11:29 BST from 172p a year ago, valuing the company at £5.35bn. On Thursday the company reported annual profit up to £726m from £180m fuelled by households ordering goods online during the Covid-19 lockdown.

ITV's shares have more than doubled since its demotion in September to stand at 128.10p, giving the broadcaster a market value of £5.16bn. Advertising spending is bouncing back as companies seek to make the most of the economy's post-lockdown rebound.

The more valuable of the two companies on deadline day is likely to replace Renishaw, which joined the FTSE 100 in March. Since then the company's shares have lost 21%, valuing it at £3.95bn. The engineer was propelled into the leading index when its founders said they would sell their stake but no buyer has emerged.

Susannah Streeter, an analyst at Hargreaves Lansdown, said: "Royal Mail has been delivering a succession of bumper sales figures as it continues to capitalise on the e-commerce boom. The pandemic boost is likely to keep it in pole position to accelerate into the FTSE fast lane."

Several recently listed companies look likely to join the FTSE 250 list of midsized companies, including Moonpig, DarkTrace and TrustPilot, all of whose shares have gained since flotation. Candidates to leave the FTSE 250 include 4imprint, former FTSE 100 member Provident Financial and Foresight Solar Fund.

The FTSE 100 reshuffle is managed so that companies do not move in and out too often. To be relegated a company's market value must be below that of the top 10 companies beneath it and to gain promotion a FTSE 250 company's valuation must exceed that of the bottom 10 in the FTSE 100.