What is the reason for the jump in ITC shares, which has been at a high level for three years?
What is the reason for the jump in ITC shares, which has been at a high level for three years?
The surge in ITC Share Price: ITC shares have jumped more than 10 percent in the last six days as a result of its stellar performance in the year 2022. It has grown 32 percent this year.
ITC stock price: ITC’s stock is climbing steadily with a steady jump. This stock has seen good growth in the year 2022, and in just the last 6 days, it has risen by 10 percent. In yesterday’s business, ITC’s share price dropped to Rs 293, which is its highest level since 2019.
How are things going in ITC?
Yesterday, ITC’s stock made a 3-year high of Rs 293 on the BSE Sensex with a 2 percent jump. After a slow pace over the last several years, ITC’s stock has shown tremendous growth of 32 percent in the year 2022, while the benchmark index Sensex has fallen 11 percent.
Stock prices are rising for what reason?
In terms of the reasons behind ITC’s share price rise, there are a few mixed ones. In the January-March quarter, this company’s net profit had decreased to Rs 4195 crore with a growth of 12 percent, which is one of the reasons for its good results. The company had a net profit of Rs 3755 crore during the January-March quarter last year. Additionally, company revenue in the same quarter increased by 15 percent to Rs 17754 crore, compared to Rs 15,404 crore in the same period last year.
Investors had become more confident in Motilal Oswal’s stock
Motilal Oswal recently upgraded its rating for ITC to ‘Buy on Demand’ by increasing its confidence in the stock. ITC’s hotel business is also showing improvement after the Corona pandemic passed, and FMCG, which was less affected during the Kovid period is now growing faster. In Motilal Oswal’s note for the company, he noted that the hotel business is also improving and that the FMCG sector is now growing faster. Stock prices for ITC stock are rising due to healthy outlook margins and better capital allocation in the cigarette business.
According to Axis Securities, ITC should be purchased at Rs 313 per share. As of today, ITC NSE -1.85 % is trading at Rs 289.85 on the stock market.
According to analysts, ITC Ltd’s NSE -1.85 % has been happening over the course of the last 4 weeks. A defined target can be reached by the price.
Founded in 1910, ITC Ltd. is a company in the tobacco sector with a market cap of Rs 359715.84 crore.
ITC Ltd. has several key products and revenue segments, including packaged foods, agricultural products, paper, and paperboards, others, tobacco unmanufactured, hotel services, printed materials, and other operating revenues.
The financial situation
Its Consolidated Total Income for the quarter ended 31-03-2022 was Rs 18252.64 crore, down -2.85 percent from last quarter’s Total Income of Rs 18787.72 crore and up 22.32 percent from last year’s same quarter’s Total Income of Rs 14921.76 crore. According to the company, its net profit after tax for the most recent quarter was Rs 4259.68 Crore.
Investing in ITC Share today: why investors are chasing it
It has done wonders in the field of selling cigarettes and running hotels.
This year, ITC shares have gained 30 percent compared to the benchmark index Sensex, which has fallen 9 percent.
At a time when many bluechip stocks have fallen significantly, the company has maintained its charisma.
Investors were disappointed with ITC for a while, so memes began to emerge.
A few investors also wondered when this stock’s fate would change. Investors were also convinced that by separating some of the company’s big businesses and listing them on the stock market, investors would benefit.
A number of bluechip companies gave their shareholders strong returns in October last year when the market was at its peak.
The companies included those in the Adani Group and IT giants like TCS, Infosys, and Reliance Industries.
There was a time when ITC’s stock was underperforming in the market, but things have changed drastically since then.
It remains a bullish market for ITC despite the fact that these are underperforming blue chips.
Even at its current level, market experts consider ITC attractive. On Monday, the company’s stock reached its highest intra-day level in two years.
On the previous trading day, which was last Friday, ITC jumped 4%. Investors are becoming more interested in ITC because inflation has a very small effect on the company. The company also yields a good dividend. In addition to growing its consumer business, the hotel industry has also begun to recover.
In addition, ITC’s cigarette business generates maximum profits and has good potential for growth.
ITC gets more than 80 percent of its profits from cigarettes, according to Gautam Duggad of Motilal Oswal Financial Services.
A rise in raw material costs will not have a significant impact on the company in the consumer segment.
There is a cheaper cost of ownership for ITC shares compared to more expensive valuations for other FMCG companies.
ITC’s target price was recently raised to Rs 335 by Duggan’s brokerage house. According to him, the company’s shares traded at 25.4 times its annual profit in 2019.
The price is about 24-25 percent lower than it was before.
Foreign funds have become more interested in companies with a track record of good performance on environmental, social, and governance issues.
He expressed displeasure with the corporation because it dealt with cigarettes. Therefore, ITC’s stock underperformed last year as the Indian stock market reached new highs.
In those days, investors also claimed that the company had invested in the wrong kinds of businesses. As a result, it can’t earn good returns on its investment.
It is now believed that foreign funds here are less strict regarding environmental, social, and governance issues.
These companies have been able to increase profits even during a time of high inflation, which is the focus of his research today.
“ITC will benefit from FY 2023,” says Aneesh Roy of Edelweiss Financial Services.
The company’s cigarette business is expected to grow well and profits will grow in double digits.
Roy anticipates a 15% return within the next year, while Duggan expects profits to rise by 14% within the next couple of years. As a rule, they should.
Only 5% of this growth has occurred in the last five years.
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