Meme favourite ITC stock shines post Budget 2022! Should you buy?

Shares of FMCG major ITC Limited rose 2.42 per cent to hit an intraday high of Rs 233.20 on BSE. The country’s largest tobacco company is in focus as Finance Minister Nirmala Sitharaman didn't make any changes in the taxes on cigarettes and other tobacco products, which is a big positive for the company.
 
The shares have been gaining for the last 6 trading sessions. The large-cap stock hit a 52-week high of Rs 265.30 on October 18, 2021, and a 52-week low of Rs 199.10 on May 4, 2021. Currently, it is trading 16 per cent above its 52-week low and 13 per cent below its 52-week high.
 
With a market capitalisation of more than Rs 2,85,000 crore, the shares stand higher than 5 day, 20 day, 50 day, 100 day and 200 day moving averages.
 
"The budget this time didn’t impose any taxation on tobacco or cigarette, which is a positive factor for the stock. We believe that ITC stock may touch the level of Rs 240 in the near term on the back of this factor," Dr. Ravi Singh-Vice President and Head of Research-ShareIndia told BusinessToday.in.
 
Recently, brokerage firm ICICI Securities said that it's time to add this FMCG major as macro and micro factors are now turning favourable.
 
ICICI Securities expects ITC to benefit from the expectation of value (on current FCF profile basis) to outperform growth/expensive basket, potential price hikes in cigarettes in the current inflationary environment (better consumer acceptance likely), good underlying performance in the FMCG business along with higher profit (& EVA) focus, and improving outlook for the hotels business (likely cyclical upturn).
 
"We see potential market share gains in cigarettes, FMCG scale-up and profitability improvement to continue and potential to accelerate cost savings through a supply chain recast," it added.
 
Jefferies said that it is a relief for ITC as the Union Budget has kept taxes unchanged on cigarettes adding that buoyancy in GST trends is also a positive. It has a buy call on the stock with a target price of Rs 300 per share.
 
Speaking on Budget 2022, Sanjiv Puri, Chairman, ITC said that the measures announced in yesterday’s Budget for FY2022-23 will address key issues of livelihood generation by enhancing farmer incomes.
 
“The substantive enhancement of public expenditure will create a multiplier impact on growth and competitiveness. The multi-dimensional interventions to usher in Next Generation Agriculture through digitalisation, R&D, leveraging strengths of agri-techs and FPOs, will transform the agri sector,” he added.
 
ITC reported a 13.7 per cent year-on-year (YoY) rise in net profit for the quarter ended September 2021 at Rs 3,697 crore on the back of a strong pick up across all operating segments after severe disruptions in the preceding June quarter.

The company's net revenue grew 11.2 per cent to Rs 12,543 crore, while earnings before interest, tax, depreciation and amortisation (EBITDA) rose by 12.9 per cent to Rs 4,615 crore.
 
The FMCG major is all set to release its financial results for the quarter ended December 2021 on February 3, 2022.