ITC shares hit new 52-week high, up 12% in one week

Amid the astounding market rally, shares of ITC Limited rose 4 per cent to hit a new 52-week high of Rs 242.35 on BSE. The stock has been gaining for the last 4 days and has risen 12 per cent during the same period.

The stock ended 3.36 per cent higher at Rs 241.45 against the previous close of Rs 233.60 on BSE. With a market capitalisation of Rs 2,97,474.28 crore, the shares of ITC stand higher than 5-day, 20-day, 50-day, 100-day and 200-day moving averages. The large-cap stock has risen 15.5 per cent since the beginning of this year and has delivered a 37 per cent return in the past 12 months.

"ITC has a strong track record of generating free cash flows, mainly due to its cigarette business, which has been a cash spewing machine. The cigarette volumes will recover once the Covid threat subsides," Akhil Rathi, Vice President Advisory at Marwadi Shares and Finance Limited told BusinessToday.In.
 
"The management has guided that CAPEX in the FMCG and hotels segment is almost over and the focus would now be on scaling these businesses. This would increase the return ratios. Also, now due to lower CAPEX requirements ahead, the company has come up with a new dividend policy, and the payouts will be around 80-85% (higher than the decadal average of ~67%), making ITC's dividend yield one of the best in the FMCG industry," he noted.

According to MarketsMojo, the company has a low Debt to Equity ratio (avg) at -0.32 times and has high management efficiency with a high ROE of 22.24%. The stock is trading at a premium compared to its average historical valuations and with a ROE of 21.8, it has a Fair valuation with a 4.8 Price to Book Value.

The technical trend has improved from Mildly Bullish on September 20, 2021, and the stock is technically in a Bullish range. Multiple factors for the stock are Bullish like MACD, Bollinger Band, KST and OBV.

Jefferies has maintained an 'outperform' rating on the stock with a raised target price of Rs 300 per share. The brokerage house noted that the company is set to see a recovery in cigarette volumes and earnings in the coming quarters.
 
The company reported a 28.6 per cent year-on-year (YoY) rise in its net profit at Rs 3,013 crore during the April-June quarter. Net profit in the year-ago period stood at Rs 2,343 crore. ITC's revenue from operations rose 36 per cent YoY to Rs 12,959 crore during the quarter ended June 30, 2021.
 
The 'others' segment of FMCG, which consists of branded packaged foods businesses, snacks, dairy and beverages, education and stationery, safety matches and agarbattis, among others, reported a 10.4 per cent growth in revenue to Rs 3,726 crore. The growth in the segment was driven by higher demand for health and hygiene and discretionary products.