ITC shares hit a two-year high of ₹293 on Monday’s (July 4) intra-day trade on BSE, a gain of over 3 per cent on the BSE. The company’s stock, which has been trading at its highest since May 2019, saw a seven per cent surge in the last two trading days and a 10 per cent surge in the past six trading days.
This makes ITC the best-performing stock among the S&P BSE Sensex and Nifty50 index. ITC stock has surged by over 33 per cent in the past six months. It has more than doubled from its March 2020 value of ₹ 134.95. The stock had hit a high of ₹ 353 on July 3, 2017.
The gains can be attributed to a stable tax environment for cigarettes in the country, which has allowed ITC to adjust its prices and avoid a break in demand, said media reports.
The company recorded positive results for the period of January-March 2022, with a nine per cent growth in the volume of cigarettes. The cigarette industry rebounded from the pandemic, surpassing even the pre-pandemic levels of volume.
“Stable taxation on cigarettes is expected to drive volumes, going forward. Moreover, the company has been gaining market share in cigarettes from last one year through new premium products & aggrieve trade promotions,” said analysts at ICICI said, according to a report in Business Standard.
The same report quotes analysts at Motilal Oswal Financial Services, who believe the premium multiples are justified, given its strong visibility over the medium term and the defensive nature of its business, especially in a volatile macro environment. The brokerage firm has maintained ‘buy’ rating on the stock with a target price of ₹ 335 per share.
The ITC shares, however, fell by 1.51 per cent today (July 5) , reaching ₹ 287.40 on the BSE.