ITC stock: Shares of ITC hit the Rs 300 mark for the first time since May 2019 on Thursday, rising more than 10 percent so far in July, amid hopes of better-than-expected gains for the June quarter during the previous trading session. The scrip has been gaining momentum lately, rising about 48 percent from its 52-week low of Rs 204.50. The stock hit a three-year high of Rs 301.45 per share – a level last seen on May 24, 2019. At 10:15 am on July 21, the scrip traded at Rs 300 per share on BSE, up from 1 percent from the previous close . This year, the FMCG share is up 38 percent so far.
In his speech at the AGM, ITC Chairman & MD Sanjiv Puri informed shareholders and board members about the outstanding performance of the company in recent years. Puri praised the company’s performance in the FMCG segment and announced the company’s plans to focus on global merchandise.
The FMCG company has not yet disclosed the earnings date for the June quarter.
“As we achieve scale for your company’s FMCG portfolio, our ambition is also to bring these world-class brands to overseas markets. In recent years, we have entered into distribution agreements abroad, significantly increasing the export of ITC’s ‘Proudly Indian’ brands to more than 60 countries. Over time, such exports will make a substantial contribution to the growth of your company’s value-added FMCG portfolio,” said ITC Chairman & MD.
What should investors do now?
The stock emerged as a good defensive player in the volatile stock markets. Global equity markets, including India, are under pressure from higher inflation and expected monetary tightening by central banks. Analysts also fear a recession as a result of aggressive rate hikes by the US federal reserve.
However, analysts expect ITC to be least affected by the rural slowdown, as the portfolio is predominantly food products. The company offers the best inflation hedge because its core business is completely immune to inflation risks. Investors also bought the stock for the second consecutive year due to a stable tax regime. Analysts say this has given the company the flexibility to raise prices without disrupting demand. “We expect this trend to continue and should result in improved cigarette volumes and earnings visibility in the medium term,” Motilal Oswal Securities said in a note to investors.
In his AGM, the FMCG major said that ITC wants to improve the export of FMCG value-added products. Key segment strategy, production launches, premiumization in the cigarette segment and the emerging IT segment were also discussed.
Dilip Bhat of Prabhudas Lilladher said he still sees ITC as one of the companies that can deliver outstanding performance as secular growth can be quite good.
Brokerage firm Ventura Securities says strong growth across all business segments is expected to push ITC’s total revenue to Rs 86,678.6 crore (17.7 percent CAGR) over FY21-24E. EBITDA is estimated to grow at a CAGR of 15.9 percent to Rs26,513.4 crore while net profit is estimated to grow at a CAGR of 14.5 percent to Rs19,739.7 crore.
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