ITC Shares Price Hit 3-Year High, Stock Surges 7% in Just 2 Days

In the last session, the shares of ITC Ltd. increased to a 3-year high, continuing the company’s upward trend. What should investors like you do at this time?

ITC Shares Price Skyrocket: ITC Ltd. shares kept on increasing, hitting a three-year high in the early session of Monday. The stock was up more than 2% to Rs 290 per share on the BSE, its best price since 2019. 

In contrast to the benchmark Sensex’s 9% drop thus far in 2022, the ITC stock has increased 30% to its top level this year, making it one of the highest gainers among all blue chips in a time when investors’ appetite for riskier assets has been on the decline. 

The profitable consumer goods (FMCG) company’s stock was rising at its peak point since May 2019, and it has increased 7% over the last two trading days.

ITC has been able to calibrate pricing rises to prevent a decline in demand due to a steady tax system for cigarettes in past years. 

Analysts anticipate that this tendency will continue, which should increase profitability visibility and cigarette volume over the intermediate term.

ITC Share Performance

ITC had announced outstanding performance for the January-March 2022 quarter (Q4FY22), with an increase in cigarette volume of about 9 percent.

Following a gradual return to normalcy in economic activity and coordinated efforts to strengthen market position through corporate strategy portfolio initiatives and strengthening product availability supported by superior on-the-ground execution, the cigarette segment recovered with volumes exceeding pre-pandemic levels.

What Should Investors Like You Do Now?

According to analysts, the company that produces Gold Flake cigarettes and Bingo chips is drawing a lot of interest from investors.

Because it is less affected by input rising costs, has an elevated dividend yield, expanding consumer business, recovering hotel business, and significant growth prospects in its core business—the sale of cigarettes.

Statement by Motilal Oswal

Gautam Duggad, Motilal Oswal Financial Services’ head of institutional equity research said,

“Cigarettes account for almost 80% of profits, and this is one of the few consumer sector equities that is comparatively well protected from commodity costs inflation.

Although there is a robust dividend and free cash flow creation, the tobacco industry is still in recovery, and the company is trading at a significant discount to the sector.”

Analysis & Predictions By Experts

The company currently trades at a 27% discount to its January 2019 values of 25.4 times one-year projected profits per share, according to Motilal Oswal Financial, which just raised the stock to purchase with a target price of Rs 335.

Also Read: Top 10 Most Expensive Stocks In India In 2022

Although Prabhudas Lilladher analysts see near-term margin pressure in the FMCG industry, ITC will be able to sustain double-digit profit growth because of strong momentum in other areas. 

Despite long-term dangers, the brokerage firm upped the valuation of cigarettes from 15x to 16x based on better growth and stable taxes. 

Additionally, it has given the FMCG and paper industries bigger multiples. The share’s target price is ₹305.