ITC extends rally, up 9% in a week; company to announce results on Thursday

Shares of ITC were up 2 per cent at Rs 233.20 in Wednesday’s intra-day trade, gaining as much as 6 per cent in the last two trading sessions, after the government in the Budget 2022 proposals left excise duty on cigarettes untouched. The stable taxation on cigarettes can aid volume growth for cigarette companies, which have been one of most unsettled industry from Covid related disruptions.

The stock of cigarette to fast moving consumer goods (FMCG) major quoted higher for the sixth straight trading session. In the past one week, the stock has outperformed the market by surging 9 per cent, as compared to a 3 per cent rise in the S&P BSE Sensex.

Meanwhile, the board of directors of ITC is scheduled to meet on Thursday, February 03, 2022, to consider and approve the financial results of the company for the quarter and nine months ended 31st December, 2021. The board will also consider declaration of interim dividend for the financial year ending on 31st March, 2022.

ITC in its analyst meet in December highlighted its growth initiatives across divisions and is hopeful of delivering double-digit growth ahead. It highlighted better recovery trends in cigarettes after the second Covid-19 wave, and has gained 100bps in market share. Commentary indicated improvement in mix, with stability in the tax regime and constant innovations, complemented by strong last-mile execution, analyst at Emkay Global Financial Services said.

“ITC is likely to see revenue growth of 6.7 per cent on the back of recovery in hotels, paperboard business. Moreover, cigarette volumes are expected to see around 5 per cent volume growth on the back of normalisation of out of home activity”, ICICI Securities said in Q3 result preview.

Strategy refresh, stable taxation for cigarette business, tailwinds for FMCG business, use of data analytics, widening distribution, and cost optimization via supply chain interventions and smart manufacturing are key positives. Reasonable valuations make the stock more attractive, said analyst at Centrum Broking.