ITC records sharpest intra-day gain in over three months; stock up over 4%

Earlier, on February 4, 2021, the stock had seen intra-day rally of 6.8 per cent, while it touched a 52-week high of Rs 239.15 on February 9, 2021

ITC shares, on Friday, rose as much as 4.6 per cent to Rs 212.65 on the BSE in intra-day trade, thus recording its sharpest gain in over three months, on the back of heavy volumes. Earlier, on February 4, 2021, the stock had seen intra-day rally of 6.8 per cent. It touched a 52-week high of Rs 239.15, on February 9, 2021.

At 02:20 pm, the stock of the cigarettes, tobacco products company was trading 4.4 per cent higher at Rs 212.20, as compared to 0.03 per cent decline in the benchmark S&P BSE Sensex. The trading volumes on the counter more-than-doubled with a combined 55.38 million equity shares changing hands on the BSE and NSE.

ITC has not yet declared the date for the board meeting for consideration of financial results for the quarter and financial year ended March 31, 2021. Last year, the company declared its March quarter results on June 20, 2020.

The fast moving consumer goods (FMCG) sector has seen strong growth momentum in Q2FY21 & Q3FY21 on the back of a consumption shift in key categories from the unorganised to the organised sector. Further, new product launches and e-commerce channel sales have also seen significant uptick. Analysts believe the growth momentum has continued in March quarter (Q4FY21E) as well. Further, low base due to lockdown in March 2020 has further propelled the growth numbers.

We expect ITC (FMCG) to grow 15 per cent during the quarter. In light of the sharp increase in palm oil, copra & tea prices, the companies have taken prices hikes to the tune of 5-12 per cent. We expect ITC & VST Industries to witness 4-5 per cent volume decline in cigarettes segment given the trend of work from home has reduced cigarette consumption, to a certain extent, ICICI Securities said in FMCG sector report.

The brokerage firm expected ITC to report revenue growth of 9.9 per cent with cigarette business expected to grow 7.5 per cent. The company had taken a cigarette price hike in February 2020 while base quarter sales were impacted by the lockdown in the last 10 days of March 2020. The FMCG business is likely to continue the growth momentum in the packaged foods business given consumption shift from loose to branded products. Operating profit is likely to increase 4.9 per cent on the back of lower gross margins. The company would continue the cost cutting measures to protect profitability of the business. Profit after tax expected to decline 1.2 per cent to Rs 3,751.70 crore in Q4FY21E, it said.

Meanwhile, analysts at Antique Stock Broking believe that ITC's foods business may grow at 5-8 per cent and cigarettes business at more than 20 per cent in April'21 due to low base and stock build-up before lockdown.

"We understand that the cigarettes demand was driven by opening up of institutions and public transport. Foods category continued to do well however biscuits witnessed some slowdown. Foods growth was driven by instant noodles, Aashirvaad Atta and Bingo. There was visible improvement in offtake of personal care products with the ease of lockdown and increase in out of home mobility," the brokerage firm said in FMCG sector report.