The stock of ITC has proved to be a dark horse this year. The FMCG share, long termed as┬а a defensive and safe bet,┬а has surged 50 per cent in 2022.┬а Shares of ITC, which closed at Rs 218 on December 31 climbed to Rs 328.20 level today, translating into a gain of 50.55┬а per cent during the period. Before the ongoing rally, ITC stock had been in a consolidation mode. It stood at Rs 216 on December 11, 2020. In fact, the stock closed at Rs 208 on February 24 this year, the day when Russia started military action on Ukraine, leading to a carnage in the stock markets worldwide, including India.
The rally in the ITC stock started at a time when Indian market witnessed across the board sell-off due to the war. The stock has zoomed 57 per cent till date compared to the closing of February 24. ┬а
Seven months ago, no one would have imagined that ITC would emerge as a dark horse of the Indian stock market.┬а Analysts said the rally in the stock was triggered by weaker global markets and correction in IT companies which led to strong buying in sectors which could comfortably pass on inflation costs like FMCG companies including ITC. ┬а
Shares of ITC hit their all-time high of Rs 329.90 on September 6 this year, suggesting that the party on Dalal Street is not yet over for the FMCG conglomerate. ┬а
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ITC shares approached the record high mark in todayтАЩs trading session, hitting an intra day high of Rs 329.65 on BSE. ITC stock has gained after two days of consecutive fall. Shares of ITC have gained 55.54 per cent in a year. In a month, the stock has climbed 5 per cent. Total 0.71 lakh shares of the firm changed hand amounting to a turnover of Rs 2.33 crore on BSE. Market cap of the firm rose to Rs 4.07 lakh crore.┬а ┬а
ITC surpassed Street expectations by posting a 38 percent year-on-year rise in net profit to Rs 4,169 crore in the first quarter. Revenue rose 41.5 per cent to Rs 17,289.5 crore compared with the corresponding period a year ago.
Chairman Sanjiv Puri outlined the firm’s ‘ITC Next’ strategy, emphasising its next horizon of growth at the company’s 110th annual general meeting (AGM) last month. The idea is to integrate digital and sustainability to create disruptive business models in a bid to generate enduring value for stakeholders, Puri said.
ALSO READ: ITC: The Making of an FMCG Behemoth
With broader market recovering losses amid a volatile trade environment, analysts have turned bullish on the stock of cigarette-to-hotel conglomerate in the long term. HereтАЩs a look at what they said on the prospects of the stock. ┬а
Santosh Meena, Head of Research, Swastika Investmart ┬а
тАЬThe counter is in a classical bull run. It is moving in the upward sloping channel for a longer time frame. The overall structure is remunerative as it trades above its all-important moving averages. On the upside, Rs 350 is facing the susceptible area, above this, one can expect the level of Rs 500 plus in the extended timeframe. MACD (Moving average convergence divergence) supports the current strength whereas momentum indicator RSI (relative strength index) is also positively poised.тАЭ
Vinit Bolinjkar, Head of Research, Ventura Securities
тАЬWith buoyancy in tax collections, the stress on rising cigarette taxation is diminished and should help drive cigarette volume growth.┬а The agri-commodity business prospects have sharply improved post the Ukraine invasion and the IT vertical is expected to continue its strong double-digit revenue growth with top percentile margins. The market has not taken cognizance of the fact that ITCтАЩs FY24 EBIT of Rs 24,613.5 crore is expected to be more than 1.6X that of HUL (which is the 2nd most profitable listed consumer player) and equal to the combined EBIT of the next 4 players. We believe that the company will be able to get the fruits of one of the leadership positions in many of its products with a cheaper valuation which will lead to the target of Rs 364 (19.7X FY25 EPS).тАЭ
Pavitraa Shetty, Co-founder & Trainer, Tips2Trades┬а ┬а
“Amid a mostly muted 8 months in 2022, ITC amongst all the Nifty stocks has been the steadiest performer with stellar returns thus far. Currently, the stock is overbought and investors should be booking profits at current levels. A dip near Rs 285- Rs 290 can be great buying levels for target of Rs 360 in the coming months.”
In corporate IndiaтАЩs Q1FY23 post-earnings review report, KR Choksey lead analyst Vikrant Kashyap said, “ITC had a strong quarter with revenue of Rs 1,98,313 million (plus 39.3% YoY/ plus 11.7% QoQ/ plus 16.0% vs. our estimate). ITC delivered strong growth across segments.”
On segment-wise, Kashyap said in the note, “Cigarettes growth (plus 28.6% YoY) was supported by stable taxation and subsequent gain of business from illicit trade. FMCG- Others growth (plus 19.5% YoY) was driven by Out-of-home categories including snacks, beverages, confectionery, frozen Snacks, fragrances, and agarbattis, while staples were resilient. Hotels grew on a low base (plus 334.4% YoY) driven by ARR and occupancy being ahead of pre-pandemic levels. Agri growth (plus 82.3% YoY) was led by wheat, rice, and leaf tobacco exports. Paperboards, paper and packaging growth (plus 43.3% YoY) was due to strong demand across end-user segments and exports.”
The KR Choksey analyst assigned a ‘Buy’ rating to the ITC stock with a new target price of Rs 369 apiece compared to the earlier target of Rs 325 apiece.
Geojit in a post earnings report said, “ITC delivered a strong operational and financial performance across business segments despite the ongoing challenges, including high inflation. We expect a good festival season ahead which will lead to a pick-up in consumption expenditure. We also expect leisure, FMCG, PPP, and agri-businesses to deliver strong performance by leveraging strong customer relationships. ITC continues to focus on investment in cutting-edge technology by accelerating digital presence. With a promising outlook and trust in the stockтАЩs resilience in the current market volatility, we reiterate our BUY rating with rolled forward target price of Rs 352 using SOTP valuation.”
