ITC rallies 12 per cent in two weeks; stock hits over 3-month high

The stock was up 2% at Rs 242 on the BSE in intra-day deal, its highest level since November 18, 2021

Shares of ITC hit an over three-month high of Rs 242, up 2 per cent on the BSE in Wednesday's intra-day trade, on expectation of healthy earning going ahead. It traded at its highest level since November 18, 2021.

In the past two weeks, the stock has outperformed the market by surging 12 per cent, as compared to a 5 per cent decline in the S&P BSE Sensex. The stock was close to its 52-week high level of Rs 265.30 touched on October 18, 2021.

In the past one month, the stock of ITC has gained 4 per cent, as compared to a 2.4 per cent fall in the Sensex. Moreover, in the past six months, it has risen by 4 per cent as against a 5 per cent downfall in the benchmark index. Further, over the past one year, the market price of ITC has rallied 16 per cent, as compared to a 12 per cent gain in the Sensex.

Analysts at ICICI Securities believe the Nifty will move into a consolidation phase where stocks like ITC could be the next major mover. It is likely to re-test its October highs in the coming weeks, they believe.

The stock made a 52-week high in October 2021. Since then, it has been largely range bound hovering around Rs 220 level. Moreover, it has remained above Rs 200 despite a lot of significant weakness in the last few weeks, the brokerage firm said. It has a target price of Rs 265 per share.

The company's cigarettes business, which was one of the worst impacted businesses in last two years due to Covid-19 disruptions, reported robust recovery in October-December quarter (Q3FY22). The stable taxation on cigarettes would result in high growth in cigarette volumes in the medium-term.

In Q3, the company's paperboard reported record volumes. and robust performance was aided by demand revival across most end-user segments, exports and higher realizations.

That apart,the easing of travel restrictions, pickup in leisure travel and onset of the festive/wedding season boosted average room revenue (ARR) and Occupancy levels for hotel business. Higher realisations, investments in pulp import substitution, cost-competitive fibre chain, sharper focus on operational efficiency leveraging data analytics and Industry 4.0 enabled margin expansion despite escalation in key input prices.

The company's agri business segment revenue was up 100 per cent driven by strong revenue growth in wheat, rice, spices, leaf tobacco exports leveraging strong customer relationships, robust sourcing network and agile execution. The company recorded robust growth in calue-added portfolio.

"Beside FMCG, the company delivered a strong performance across its hotel, agri and paper businesses. Occupancy in hotels segment returned to pre-pandemic levels, with EBIT back in the black after six consecutive quarters of losses. We continue to be positive on ITC, especially with the economy moving towards normalcy. Further, no tax increase in the budget 2022 on cigarette also gives confidence on sustaining cigarette volume growth," analysts at HDFC Securities had said in Q3 results update. The brokerage firm has a 'buy' rating on the stock with target price of Rs 285 per share.

Period	BSE	NSE	SENSEX	NIFTY
1 Week	5.59%	5.45%	3.64%	3.47%
1 Month	8.74%	8.53%	-2.34%	-2.37%
3 Month	8.52%	8.46%	-2.18%	-1.95%
6 Month	4.83%	4.77%	-4.23%	-4.07%
1 Year	16.27%	16.31%	12.46%	13.43%
Returns in % at 02:57 pm.