ITC hits two month low

The stock was down 12% from its recent high of Rs 354 touched on October 18, compared to 2.6% fall in Sensex.

Shares of cigarette maker ITC is trading lower by over 3% at Rs 311, its lowest level since September 6, on the Bombay Stock Exchange (BSE). The stock was down nearly 5% in past three trading sessions and accounted 71 points of the 546 points fall on the  benchmark index during the period.

ITC has underperformed the market by falling 12% from its recent high of Rs 354 touched on October 18, compared to 2.6% fall in S&P BSE Sensex. The stock hit an all-time high of Rs 380 on July 24 this year.

For the quarter ended September 30, 2013 (Q2), ITC posted a disappointing performance on the operational front with cigarette volumes declining by around 4-5% resulting in a weak 8.8% year-on-year increase in net sales.

However, most of the analysts have maintained ‘Buy” rating on the stock with a target price in the range of Rs 358 to Rs 388.

Sustained weakness in cigarette volume growth and slowdown in FMCG demand remains a key risk to further rerating of the stock, says analyst at Prabhudas Lilladher in a note.

Meanwhile, JP Morgan has revised down their EPS estimates for FY14-15 by 1-1.5%.