ITC hits 47-month high in a weak market on heavy volumes; up 5% in 1 month

Shares of ITC, the diversified fast moving consumer goods (FMCG) company, hit a fresh 47-month high of Rs 316.95, up 1.5 per cent on the BSE in Monday's intra-day trade in an otherwise weak market amid heavy volumes.

The stock was trading at its highest level since September 3, 2018. ITC had hit a record high of Rs 353 on July 3, 2017.

In the past one week, ITC has outperformed the market by gaining 3 per cent, as against nearly 1 per cent decline in the benchmark Sensex. Moreover, in the past one month, it gained 5 per cent in-line with the market.

At 10:34 am, ITC was trading 1.3 per cent higher at Rs 316.25, as compared to 0.95 per cent decline in the S&P BSE Sensex. At 5.2 million shares, on both the exchanges, trading volumes on the counter surpassed its average volumes recorded in the past two weeks on the BSE. 

For the quarter ended June 2022 (Q1FY23), ITC reported better-than-expected sales growth momentum. The company posted a 38 per cent year-on-year (YoY) growth in its consolidated net profit, which came in at Rs 4,169 crore, amid growth across segments. Net sales came in at Rs 18,164 crore, up 41 per cent year-on-year (YoY) and well ahead of expectations. Operating margins remained flat at 30.8 per cent. The company attributed the performance to a "robust" performance across segments.

"ITC posted encouraging performance with around 26 per cent cigarette volume growth and margin expansion across cigarettes, paperboard and hotels business. The near-term outlook remains positive given positive cigarette volume traction in a stable tax regime, strong pricing and benefits of back ward integration in paper board in near term, sequentially improving ARR and occupancy levels in Hotels and sustained growth across segments in FMCG with margin expansion likely from Q3FY23," analysts at Prabhudas Lilladher said in a result update.

HDFC Securities added that ITC continues to outperform its FMCG peers with sharp growth rebound across all business segments. It remains positive on the stock given favourable risk-reward.

Those at Religare Broking also have a positive outlook on the long-term prospects given its strong focus on innovation and premiumization in cigarettes and FMCG businesses.

"Also, revival and growth across segments such as hotel, paperboards and agri will continue to aid sentiments. In addition, high dividend payout, debt-free status and strong free cash flow generation as compared to its peers make it one of the preferred picks in the sector," the brokerage firm said in its result update.