ITC hits life-time high, bounces back 11% from day's low on heavy volumes

Shares of ITC were up nearly 4 per cent at Rs 365.65, surpassing its previous high of Rs 362, touched on November 11, 2022, on the BSE in intra-day trade on Wednesday.

Shares of ITC jumped nearly 4 per cent to Rs 365.65, surpassing its previous high of Rs 362, touched on November 11, 2022, on the BSE in Wednesday’s intra-day trade. The stock of cigarette major bounced back 10 per cent from its intra-day low of Rs 329 on the back of heavy volumes.

The stock of cigarette major dipped nearly 7 per cent in intra-day trade after the government proposes to revise the National Calamity Contingent Duty (NCCD) upwards by about 16 per cent on specified cigarettes.

“National Calamity Contingent Duty (NCCD) on specified cigarettes was last revised three years ago. This is proposed to be revised upwards by about 16 per cent,” Finance Minister Nirmala Sithraman said on Wednesday in her Budget 2023 speech.

At 12:54 PM; ITC quoted 3.4 per cent higher at Rs 364.15, as compared to 2 per cent rise in the S&P BSE Sensex. The average trading volumes at the counter jumped over five-fold today. A combined 47.91 million equity shares changed hands on the NSE and BSE.

ITC is the biggest cigarettes and the second largest FMCG company in India with around 78 per cent of market share in cigarettes & presence in staples, biscuits, noodles, snacks, chocolate, dairy products & personal care products. The company is also present in paperboard, printing & packaging business, agri & hotels businesses.

Meanwhile, the board of directors of ITC are scheduled to meet on February 3, 2023 to consider the unaudited financial results of the company for the quarter and nine months ended December 31, 2022. The company said board will also consider declaration of interim dividend for the financial year ending on March 31, 2023.

The brokerages estimate strong growth for ITC’s FMCG business led by price hikes, strong traction in discretionary categories (due to high mobility) & strong growth in education & stationary business. ITC is expected to witness strong growth in cigarettes volumes during the quarter.

“ITC is expected to witness 5.9 per cent revenue growth on the back of strong growth in cigarettes, FMCG, paperboard & hotels business. Agri business is expected to see sales decline mainly due to restriction on wheat & rice exports during the quarter. We estimate 10.3 per cent cigarettes sales growth led by 7 per cent volume growth,” analyst at ICICI Securities said in result preview.

FMCG business is expected to see strong 19.2 per cent growth led by traction in discretionary categories, price hikes taken in the last one year and recovery in education & stationary business. The brokerage firm estimates 12.6 per cent growth in operating profit on account of operating leverage in cigarettes & softening of palm oil prices. It estimates 8.4 per cent growth in net profit during the quarter.

“Cigarette volumes are likely to expand by 7.5 per cent. FMCG is likely to post 17 per cent growth with QoQ margin improvement. Paper business will grow 10 per cent, while Hotel revenues will grow by 32.5 per cent. Overall PAT expected to grow by 11.8 per cent,” the brokerage firm Prabhudas Lilladher said in earnings preview.

Sharekhan expect growth momentum in the cigarette sales volumes to sustain with government actions on curbing illicit cigarette sales. The hotels business is expected to post strong performance in H2 due to a strong business period. Non-cigarette FMCG revenues would grow in double digits while margins might improve sequentially in the coming quarters, the brokerage firm said.