ITC posts biggest monthly rise since November 2020; 16% in March

ITC shares posted their biggest monthly gain in the past 16 months, rising 16 percent in March 2022. With this, the stock became the biggest gainer among S&P BSE Sensex and Nifty50 shares in March. Benchmarks rose 4 percent during the month.

Earlier in November 2020, ITC rose 17.2 percent in one month. Meanwhile, in June 2009, the stock rose 31 percent for the month, the data shows.

The stock is now approaching a 52-week high of Rs 265.30, which was touched on October 18, 2021. It reached a record high of Rs 353 on July 3, 2017.

For the October-December first quarter (FY22 third quarter), ITC reported a strong overall revenue performance led by a strong recovery across markets due to an uptick in mobility and an efficient distribution system.

The company’s cigarette business, which has been one of the worst affected in the past two years by the Covid-19 disruptions, posted a strong recovery in the third quarter. The company’s paperboard reported record volumes and the strong performance was supported by reviving demand across most end-user segments, exports and top deliveries. Regardless, the easing of travel restrictions, leisure travel pickup and the start of the holiday/wedding season boosted average room revenue (ARR) and occupancy levels for the hotel business.

Analysts say the company is relatively isolated because it has other segments like hotels and cigarettes, cushioning the blow to the consumer goods sector from sharply rising input costs.

What also works for ITC is the fact that the government has kept the tobacco excise tax unchanged in the Union budget for FY 2022-23 (Fiscal Year 23), and that cigarette volumes are on the rise. Regardless, the lifting of most Covid restrictions after the third wave has led to an increase in mobility, which bodes well for the ITC hotel business.

According to an analyst at JP Morgan, normalcy began in the cigarette industry with improved levels of mobility. Performance of other consumer goods will continue to be affected in the short term by higher cost of goods sold inflation and soft volume growth even as revenue rebalancing continues – staples / prepared foods / hygiene moderate from high base while discretionary / OOH gradually improves.

The hotel and paper department keeps track of expectations. The brokerage said ITC’s competitive position continues to strengthen across cigarettes and most consumer goods categories, benefiting from the reach of enhanced distribution, an enhanced e-commerce presence, and an intensity of purposeful innovation.

The stock closed nearly 1 per cent higher at 251 rupees on the Bahrain Bourse on Thursday versus a 0.2 per cent fall in the benchmark Sensex.

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