ITC Shares Shine in Falling Market, Hit 52-Week High; bullish brokers, see up to 18% upside

Shares of ITC outperformed in a falling market on Thursday on the back of strong earnings in the quarter ended March 31, 2022. In early trading, shares of the major consumer packaged goods company jumped nearly 5% ( 4.74%) to reach a high value over 52 weeks. of Rs 279.15 per share on BSE. The surge in ITC shares is significant as the market witnessed a huge sell-off, following weak global signals. The Nifty50 benchmarks and the Sensex corrected more than 2% on Thursday.

As of 11:40 a.m., shares of the major tobacco maker were trading up 2.5% at Rs 273.10 per share on BSE. Despite a high level of volatility, the FMCG counter has delivered a healthy return of over 30% in the past year as of May 19.

The surge in ITC shares comes after the tobacco and hospitality major on Wednesday reported an 11.60% rise in its consolidated net profit to Rs 4,259.68 crore for the fourth quarter ended March. 2022, driven by overall growth in verticals.

ITC, the largest cigarette company and second largest FMCG company in India with ~78% market share in cigarettes and presence in commodities, biscuits, noodles, snacks, chocolate, dairy and personal care products, had recorded a net profit of Rs 3,816.84 crore in the January-March quarter of the previous fiscal year, the ITC said in a regulatory filing.

Meanwhile, brokerages remain bullish on the FMCG company and have a mixed stance on the stock. Here is what they say:

Brokerage firm JM Financial sees a maximum rise of 17% on the meter. The brokerage sees the potential for the stock to reverse the long streak of poor performance as it posted another quarter of strong, all-around performance in earnings.

It maintained a Buy rating with a target price of Rs 315 on the major FMCG. It turns out to be a rise of almost 18% on the closing price of May 18.

ICICI Direct Research raised the ITC rating from hold to buy with a target price of Rs 310, resulting in a 16% rise on Wednesday’s closing price of Rs 267 per share. on BSE.

He believes that cigarette volumes, price growth in FMCG business and strong agricultural exports would generate revenue for the company in the future.

Stating that the company delivered a strong performance with another quarter of robust cigarette volume growth (~9%) that exceeded pre-Covid levels and now appears to be on a growth trajectory, Yes Securities maintained a rating of purchase with a target price of Rs 308.

“”Steady 12% growth in FMCG business despite high base with sequential improvement in margins, recovery in hotel business and above-expected growth in Agri (29% growth) and Cartons ( 32% growth) on a high basis. We reiterate our BUY rating,” the brokerage said.

Motilal Oswal maintained its neutral rating on ITC. In the current environment where material cost inflation is a concern, ITC’s resilient cigarette margins provide relatively better near-term visibility compared to its peers, he said.

“Longer-term revaluation will, however, depend on diversification away from cigarettes (81% of FY22 EBIT) and whether sustained earnings growth returns to late-teen levels seen in the first half of the last decade. We maintain our neutral rating on the stock with a TP of INR 265,” the brokerage added.