ITC outperforms in weak market; stock gains 7% in last five days

In the past six months, the market price of ITC has gained 5.5 per cent, as compared to a 7 per cent decline in the Sensex.

Shares of cigarettes-to-hotels major ITC were trading 2 per cent up at Rs 223 on the BSE in Friday’s weak intra-day trade. The stock has rallied 7 per cent in the past five trading days.  Meanwhile, at 12:02 pm, the S&P BSE Sensex was down 1.5 per cent at 54,296 points. 

In the past one month, the stock of ITC has gained 4 per cent, as compared to a 3 per cent fall in the Sensex. Moreover, in the past three months, it has risen marginally by 0.09 per cent as against a 6 per cent downfall in the benchmark index.

Further, over the past six months, the market price of ITC has rallied 5.5 per cent, as compared to a 7 per cent decline in the Sensex. The stock had hit a 52-week high of Rs 265.30 on October 18, 2021 and a 52-week low of Rs 199 on May 4, 2021.

For the October-December quarter (Q3FY22), ITC reported strong all-around revenue performance led by robust recovery across markets due to rise in mobility and efficient distribution system. Cigarettes staged a recovery with revenues at Rs 6,959 crore, compared with Rs 6,091 crore a year ago. Pre-tax profits from the segment stood at Rs 4,187 crore, compared with Rs 3,659 crore in the year-ago period.

The company's cigarettes business was one of the worst impacted businesses in last two years due to Covid-19 disruptions. Cigarette business growth in the current quarter reflects that volumes surpassed pre-covid high levels. Margins of this segment rose 55 bps, driving 14 per cent year-on-year growth in earnings before interest and tax (EBIT).

Similarly faster growth in paperboard business also reflected demand recovery from the user industries. Though, FMCG business has grown at a slower pace of 9.3 per cent, it is still stronger growth compared to most other FMCG peers, according to ICICI Securities. The brokerage believes stable taxation on cigarettes would result in high growth in cigarette volumes in the medium term.

ITC continued to see an improvement in market standing, with innovation and interventions addressing gaps. Stability in taxes remains key for the industry to sustain steady volume growth and gains from illicit trades, said Emkay Global Financial Services said in a result update.