Meme favourite stock ITC on a roll! Should you buy, sell or hold?

After years of subdued performance on Dalal Street, the shares of the country’s largest tobacco company ITC Ltd have finally managed to turn around its performance.

Currently, the stock is hovering around its 52-week high of Rs 273.10. It touched an intraday high of Rs 272.50 on BSE. With a market capitalisation of more than Rs 3,30,000 crore, the shares stand higher than 5 day, 20 day, 50 day, 100 day and 200 day moving averages.

On a year-to-date (YTD) basis, the stock has delivered around 24 per cent return to its shareholders. Experts say that the company could potentially benefit from wheat exports. The country's wheat exports crossed 70 lakh tonnes in 2021-22 as against 21.55 lakh tonnes in 2020-21, according to the official data.

Ravi Singhal, Vice Chairman, GCL Securities noted that the paper is doing well for the company as a result of the disrupted supply chain and rising prices. Even cigarette and tobacco businesses are doing great after the lockdown, and no new taxes are being imposed in the budget. 

According to Manoj Dalmia-Founder and Director-Proficient Equities Limited, the company has been maintaining a healthy dividend payout of 79.34 per cent. Also, TTM EPS is 12.01 and is increasing over the years.

Sharing his technical view, he said that ITC stock looks good on charts it is nearing a key breakout level of Rs 270, the stock can move to Rs 313 levels after this breakout. Stop Loss could be around Rs 250 levels, he added.

AK Prabhakar, head of research, IDBI Capital Market said, "The paper prices are at lifetime high and the hotel occupancy ratio is high too. Also, the wheat exports have increased significantly which is very positive for the company as ITC is one of the major wheat traders in India."

"After a long underperformance, the stock is in focus now. Attractive valuations, good dividend yield, and anticipation of hotel business demerger are some of the reasons responsible for the buying interest seen in ITC. In this high inflationary environment, ITC can deliver decent returns for investors in coming quarters," Kranthi Bathini, equity strategist at WealthMills Securities told Business Today.

However, he noted that ESG norms of some global funds have some constraints on investing in ITC due to their high revenue exposure to the cigarette business.

ITC reported a year-on-year consolidated net profit of Rs 4,056 crore, up 15 per cent in the quarter ended 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.