Analysts hope that ITC’s cigarette business will be fully restored by a vigorous vaccination drive and a reduction in Govt-19 cases.
Expectations of improved outlook lifted ITC shares to a new 52-week high of Rs 239.40, up 4 per cent on the BSE in domestic trade on Monday, touching on February 9, 2021.
Over the past three trading days, Major’s share of cigarettes and fast moving consumer goods (FMCG) rose 12 per cent to 0.59 per cent on the S&P BSE Sensex.
ITC has a 78 percent market share in the cigarette market and in staples, biscuits, noodles, snacks, chocolate, milk and personal care products.
The company has revenue of Rs 4,549 crore in the paper card, printing and packaging business and Rs 8,001 crore in the agribusiness business (up to FY21). Its hotel business is also recovering following the opening of the economy.
During the April-June quarter, ITC’s cigarette levels suffered a second wave (down 21 percent on a two-year basis).
However, week-on-week improvement was seen from mid-June, with most markets returning to normal and recovering rapidly compared to the first waves. “FMCG business showed strong performance with 10.4 per cent growth in revenue …
While cigarette opportunities in India are attractive to per capita consumption, investment patterns have changed as ESG considered a significant share of the first wave,” analysts at Edelweiss Bonds said. A result update.
Meanwhile, holders of ICICI securities believe that ITC’s cigarette business will be fully recovered by reducing aggressive vaccine-driven and Govt-19 cases. “We expect the prices of the commodities raised in the next two to three quarters to continue with significant margin improvement in the FMCG business. However, the investor opinion of the cigarette business and its long-term prospects have been the biggest drag.
Stock price performance over the past five years,” the brokerage said in a June quarterly update.
ITC has big aspirations for the FMCG business, which has reached an average sales growth of 9% over the past four years, and analysts expect the growth rate to improve to 13-14% in FY21-FY24.
As of September 20, ITC is recovering its cigarette volumes and revenue for the coming quarters, according to the Jefferies report.
The brokerage has an “advanced” rating on the stock and its target ranges from Rs.275 to Rs. Has been raised to 300.