Meme favourite ITC on a roll; stock nears 52-week high

Shares of FMCG major ITC Limited jumped 1.52 per cent to hit an intraday high of Rs 253.60 on BSE on Wednesday. The stock has been gaining for the last two trading sessions.   It hit 52-week high of Rs 265.30 on October 18, 2021 and 52 week low of Rs 199.10 on May 04, 2021. The stock ended 0.86 per cent higher at Rs 251.95 against the previous close of Rs 249.80. Market cap of the firm rose to Rs 3,10,475.47 crore.   Domestic brokerage house Edelweiss said that the legal cigarette players will gain market share gain from illegal players (almost one-fourth the market because of no tax hike for second consecutive year.   It noted that the company could potentially benefit from wheat exports (Russia and Ukraine account for 30 per cent of global exports) if the Indian wheat crop is good, regulators have a conducive policy and India’s food inflation does not become a big challenge.   Also, the hotels business will see a strong recovery in FY23 given rising mobility, pent-up demand and vaccinations.   "Although gross margins in FMCG are likely to remain under pressure, cost optimisation and price hikes will help. Considering these factors and a dividend yield of 4-5 per cent, we maintain ‘BUY’ with a target price of Rs 285," Edelweiss added.   The brokerage firm highlighted that in FY22, ITC has exported a significant quantity of wheat due to poor production in Russia and Ukraine. Global wheat prices are currently at a 14-year high.   ITC reported a year-on-year consolidated net profit of Rs 4,056 crore, up 15 per cent in the quarter ended 31 December, 2021. The company had posted a net profit of Rs 3,526 crore in the year-ago period.   Revenue from operations for the period came in at Rs 18,365 crore, up 30 per cent for the December quarter. The company had posted a revenue of Rs 14,124 crore in the corresponding period.