ITC gains after brokerage maintains overweight call

ITC gained 1.86% to Rs 255 after a global brokerage reportedly maintained an overweight call on the stock and raise target price to Rs 370 from Rs 360 per share.

According to reports, the brokerage cited that ITC is one of the biggest beneficiaries of corporate tax cut, adding that increased pricing flexibility would strengthen long-term growth. However, it does not expect ITC to raise prices in the cigarette portfolio in FY2020.

Finance Minister Nirmala Sitharaman on 20 September 2019, slashed corporate tax rate to 22% without exemptions. The effective corporate tax rate after surcharge now stands at 25.17%. As on 31 March 2019, ITC paid corporate tax of 32.97%.

ITC is currently the top gainer in the Nifty 50 index.

Meanwhile, the S&P BSE Sensex was down 90.80 points or 0.23% to 38,898.94.

On the BSE, 6.90 lakh shares were traded in the counter so far compared with average daily volumes of 9.47 lakh shares in the past two weeks. The stock hit a high of Rs 258.10 and a low of Rs 250.10 so far during the day.

The stock hit a 52-week high of Rs 310 on 15 Apr 2019. The stock hit a 52-week low of Rs 234.1 on 18 Sep 2019.

The ITC stock underperformed the market over the past one month, rising 3.22% compared with 3.99% rise in the Sensex. It also underperformed the market in past one year, sliding 14.56% as against Sensex's 6.70% fall.

On a consolidated basis, ITC's net profit rose 12.8% to Rs 3355.01 crore on a 6.7% increase in net sales to Rs 12532.31 crore in Q1 June 2019 over Q1 June 2018.

ITC has a diversified presence in FMCG, hotels, packaging, paperboards & specialty papers and agri-business.

Its wide range of cigarette brands includes Gold Flake, Bristol, Insignia, India Kings, Classic, American Club, Navy Cut, Players, Scissors, Capstan, Berkeley, Flake, Silk Cut, Duke & Royal.

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