At current valuation, very limited downside risk for ITC stock investors

Higher dividend yield and scaling up of FMCG business offer comfort

Despite being the most attractively valued amongst Nifty FMCG stocks, ITC continues to underperform peers as well as leading indices. In the calendar year 2020 so far, the ITC stock has lost a whopping 25 per cent as compared to about 2 per cent gain in the Nifty FMCG index and 5.3 per cent fall in the Nifty50 during the same period. However, analysts say, it may have hit a trough and with FMCG (non-cigarette) business gaining pace, cigarettes operations near normal and a high dividend yield, the stock is attractive.

Tax overhang and ESG (environmental, social and governance) concerns over