Last Updated on Jul 8, 2022 by Anjali Chourasiya
The Indian Tobacco Company (ITC), once mocked for being a tortoise, is now breaking all records. Shares of ITC have gained a stellar 33%, the highest gainer in Nifty this year so far. It is on its way to entering the elite club of the top 10 companies in India.
Currently, though the benchmark indices have turned negative, ITC has hit its 3-yr high of Rs. 294.35. It is also at its fresh 52-week high. The stock has zoomed 117% from its March 2020 low of Rs. 134.95. Previously, it had hit a record high of Rs. 301.33 in April 2019. In one year, the stock has surged to over 44%.
The Kolkata-based FMCG company derives over 80% of its profits from cigarettes. A stable tax environment for cigarettes in recent years has allowed ITC to calibrate price increases to avoid a disruption in demand. For Q4 FY 2022, the company has reported strong results with around 9% cigarette volume growth.
Based on market capitalisation, the stock is poised to enter the elite club of the top 10 companies in India. It is now at the 11th spot behind Bharti Airtel. ITC has a market cap of Rs. 3.6 lakh cr. At the same time, Bharti Airtel stands at Rs. 3.8 lakh cr. and HDFC secures the ninth position with a valuation of approximately Rs. 4 lakh cr. ITC has left Bajaj Finance and Kotak Mahindra Bank behind recently.
Furthermore, Motilal Oswal Financial gave a target price of Rs. 335, a 22% upside to the current stock price. They said, “We expect this trend to continue, which should result in improved cigarette volumes and earnings visibility over the medium term. The breadth of ITC’s FMCG product portfolio gives it an advantage in a rapidly changing demand environment.”
Recently, the cigarettes-to-hotels conglomerate has allotted 92,31,830 Ordinary Shares to its employees at Rs. 1 apiece under the Employee Stock Option Scheme. Last month, Ventura Securities’s research note analysts said that, among Nifty 50 stocks, ITC is one of the few stocks that provide a strong growth opportunity and an attractive dividend yield of 4.19%.
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