ITC Stock: Shares of ITC on Thursday hit Rs 300 mark for the first time since May 2019, surging over 10 per cent so far in July amid hopes of better than expected earnings for June quarter in the previous trading session. The scrip has gathered pace of late, rallying some 48 per cent from its 52-week low of Rs 204.50. The stock hit a three-year high of Rs 301.45 a share – a level last seen on 24 May 2019. At 10.15am on July 21, the scrip was trading at Rs 300 a share on BSE, up 1 per cent from its previous close. So far this year, the FMCG stock has advanced 38 per cent.
In his speech at the AGM, ITC Chairman & MD Sanjiv Puri informed shareholders and board members about the stellar performance of the company in recent years. Puri praised the company’s performance in the FMCG segment and announced the company’s plans to foray into global merchandise.
The FMCG company has not announced the June quarter earnings date yet.
“As we achieve scale for your company’s FMCG portfolio, it is also our aspiration to take these world-class brands to overseas markets. In recent years, we have established distribution arrangements abroad enabling appreciable progress of exports of ITC’s ‘Proudly Indian’ brands to over 60 countries. Over time, such exports will make a substantial contribution to the growth of your Company’s value-added FMCG portfolio,” ITC Chairman & MD said.
What Should Investors Do Now?
The stock emerged as a good defensive play in volatile equity markets. Global stocks markets including India are under pressure due to higher inflation and expected monetary tightening by central banks. Analysts also fear a recession due to aggressive rate hikes by the US federal reserve.
However, analysts expect ITC to be least affected by the rural slowdown as its portfolio comprises mainly foods. The company offers the best inflation hedge as its core business is completely immune to inflation risk. Investors also bought the stock due to a stable tax regime for the second consecutive year. Analysts say this has given the firm flexibility to increase prices without disrupting demand. “We expect this trend to continue and this should result in improved cigarette volumes and earnings visibility over the medium term”, Motilal Oswal Securities said in a note to investors.
In its AGM, the FMCG major said ITC is looking to enhance exports of value-added FMCG products. It also talked about strategy for the key segments, production launches, premiumisation in the cigarette segment, and the emerging IT segment.
Dilip Bhat of Prabhudas Lilladher said he still sees ITC as one of the companies which can give a very stellar performance because the secular growth can be quite good.
Brokerage firm Ventura Securities says strong growth across all business segments is expected to drive ITC’s overall revenues to Rs 86,678.6 crore (17.7 per cent CAGR) over FY21-24E. EBITDA is estimated to grow at a CAGR of 15.9 per cent to Rs26,513.4 crore while net profit is estimated to grow at a CAGR of 14.5 per cent to Rs19,739.7 crore.
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