ITC posts sharpest monthly rally since November 2020; surges 16% in March

In November 2020, ITC had rallied 17.2 per cent in a single month, while in June 2009, it had zoomed 31 per cent during the month

Shares of ITC recorded their sharpest monthly rally in the past sixteen months, surging 16 per cent in the month of March 2022.  With this, the stock became the top gainer among the S&P BSE Sensex and Nifty50 stocks in the month of March. The benchmark indices were up 4 per cent during the month.

Earlier in November 2020, ITC had rallied 17.2 per cent in a single month. Meanwhile, in June 2009, the stock had zoomed 31 per cent during the month, data shows.

The stock is now closer to its 52-week high level of Rs 265.30, touched on October 18, 2021. It had hit a record high of Rs 353 on July 3, 2017.

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.

The company's cigarettes business, which was one of the worst impacted businesses in last two years due to Covid-19 disruptions, reported robust recovery in Q3. The company's paperboard reported record volumes and robust performance was aided by demand revival across most end-user segments, exports and higher realizations. That apart, the easing of travel restrictions, pickup in leisure travel and onset of the festive/wedding season boosted average room revenue (ARR) and Occupancy levels for hotel business.

Analysts say the company is relatively insulated as it has other verticals such as hotels and cigarettes, which cushion the blow to its FMCG segment from the sharp rise in input costs.

What’s also working for ITC is the fact that the government has kept the excise duty on tobacco unchanged in the Union Budget for fiscal 2022-23 (FY23), and the cigarette volumes are steadily climbing. That apart, lifting of most Covid restrictions post the third-wave has led to an increase in mobility, which augurs well for ITC’s hotel business.

According to analyst at JP Morgan, normalcy is setting in for the cigarette business with improving mobility levels. Other FMCG performance will stay impacted in the short term from high COGS inflation and soft volume growth even as revenue rebalancing is underway - staples/convenience foods/hygiene moderate off high base while discretionary/OOH progressively improving.

Hotel and Paper division are tracking ahead of expectations. ITC’s competitive position continues to strengthen across cigarette and most FMCG categories, benefiting from augmented distribution reach, enhanced E- commerce presence and meaningful innovation intensity, the brokerage firm said.

The stock ended nearly 1 per cent higher at Rs 251 on the BSE on Thursday as against a 0.2 per cent dip in the benchmark Sensex index.