ITC share price hits new 52-week high on back of improved outlook; up 11% in 3 sessions – Check what analyst says

Surging for the third straight session on Monday, the shares of cigarettes and FMCG major ITC hit a fresh 52-week high of Rs 239.4 per share after rallying for over 3.5 per cent on the BSE intraday trade on Monday on the back of improved quality expectations and analysts being bullish on the counter.

The scrip breached its previous high of Rs 239.15, which it touched on February 9, 2021, and jumped around 11 per cent in the last three trading sessions as against a 0.59 per cent rise in the S&P BSE Sensex.

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ITC is set to see a recovery in cigarette volumes & earnings in coming quarters, says a global brokerage firm in its report on Monday, further adding that the valuations are attractive and stock offers 5 per cent yield. 

According to the brokerage, the Goods and Service Tax (GST) Council made no rate change in any of the cess sectors, including Tobacco. It has maintained an Outperform rating and revised its price target to Rs 300 from 275 per share.

The company has around 78 per cent market share in the cigarette market and a presence in staples, biscuits, noodles, snacks, chocolate, personal care, dairy among other products.

In the first quarter of FY22, ITC's cigarettes volumes were impacted by the second wave (down 21 per cent on a two-year basis). However, week‐on‐week improvement was seen since mid-June with most markets returning to normalcy and witnessing faster recovery compared with the first wave. 

Choice Broking Executive Director Sumeet Bagadia said with the overall FMCG sector is buzzing, ITC has been an underperformer and trying to catch up the trend. He expects the price would reach Rs 240-250 per share immediately in few days, with support of Rs 215 apiece.

At around 12:25 pm, the stock is trading over 2 per cent to Rs 236.05 per share on the BSE, as compared to 0.14 per cent fall in the S&P BSE Sensex at the same time on Monday.

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