Shares of ITC gained nearly 3 percent against Rs 280.10 on the NSE in Friday’s intra-day trading in an otherwise weak market, as a good defensive game in a volatile environment. The FMCG stock, which traded close to its 52-week high of 282.30 rupees, reached May 20, 2022. By comparison, the S&P BSE Sensex fell 1 percent at 52,470 at 10:46 AM.
Stock price history
Over the past three months, ITC has outperformed the market by gaining 10 percent, versus a 12 percent drop in the Sensex. The stock is also up 28 percent in six months, compared to a 10 percent drop in the benchmark index. ITC shares are up about 38 percent in a year, compared to a more than 11 percent drop in benchmark NSE Nifty 50, and the positive momentum is likely to continue in the near term, analysts say.
Not only does ITC have a near monopoly on its traditional cigarette business, but is also the leading FMCG marketer in India, a clear market leader in the Indian carton and packaging industry, a globally recognized pioneer in empowering farmers through its far-reaching agribusiness, a pre-leading hotelier in India with a chain of luxury hotels and a specialist global provider of digital solutions through its wholly owned subsidiary, ITC Infotech.
“While valuations of global Tobacco peers have recovered to their pre-pandemic levels (January ’19), ITC is still trading 24 percent off its Jan ’19 valuation of 25.4x one-year EPS . We value ITC at 21x FY24E EPS, representing a 65 percent premium over the global comparable average. We believe the premium multiples are justified given the strong medium-term visibility and defensive nature of its business, especially in a volatile macro environment,” analysts at Motilal Oswal Financial Services said in ITC’s annual update. .
Benign tax ruling, linked to new products that boost cigarette volumes; The advance of e-commerce may spur the FMCG business, but broadening distribution and supply chain optimization coupled with smart manufacturing optimization costs are the key positives of ITC’s recent performance, according to analysts at HDFC Securities.
For the quarter ended 03/31/2022, the company reported a consolidated total income of Rs 18,252.64 Crore, a decrease of -2.85 percent from the last quarter Total income of Rs 18,787.72 Crore and an increase of 22.32 percent from last year in the same quarter Total income of Rs 14,921.76 crore. The company reported net profit after tax of Rs 4,259.68 Crore in the last quarter.
Should you buy, sell or hold?
ITC’s performance in FY22 was robust on all fronts, including strong recoveries in cigarettes and hotels, launched more than 110 new products in FMCG and maintained margin, IIFL Securities said. Taxes are unlikely to rise ahead of the Union budget, putting ITC in a better position than its competitors in the near term, given its reasonable valuations. It maintained the stock’s ‘buy’ rating with a price target of Rs 305, implying a potential 15% rally going forward.
Furthermore, Sharekhan has buy ITC with a target price of Rs 290. The current market price of ITC is Rs 274.
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