ITC, the Indian conglomerate, has been making significant strides in the stock market. Recently, the company's share price reached a new high of Rs 512.85, marking a 2% increase in intraday trade. This surge is largely attributed to the anticipation of improved operational performance in the second half of the current financial year (H2 FY25).
Over the past six months, ITC's share price has significantly outperformed the broader market. It has surged by 25%, compared to the BSE Sensex's 11.9% rise. However, in the current calendar year, the stock has underperformed the market, gaining 9% against the benchmark index's 14% rally.
ITC's management has attributed the company's strong performance to several factors. The Union Budget 2024-25 provided a favourable environment for economic growth, with its focus on investment, employment, macroeconomic stability, and inclusive development. Moderating inflation, improving agricultural terms of trade, and expected normal monsoons are also expected to boost consumption demand.
ITC demonstrated resilience across its various segments in the June quarter of FY25. The Cigarettes, FMCG, Hotels, and Agri businesses all showed notable advancements. However, the Paperboard segment continued to face challenges.
Despite these challenges, ITC's innovations, strategic expansions, and effective cost management contributed to its growth. With a stable tax on cigarettes, analysts anticipate sustainable growth in this business.
Analysts are optimistic about ITC's prospects for the second half of FY25. Rural recovery signs, stable commodity prices, and favourable macroeconomic conditions are expected to drive consistent earnings growth.
Key factors contributing to the positive outlook:
While analysts acknowledge the significant jump in ITC's share price, they still see potential for further upside. Brokerage firms like KRChoksey Shares and Securities and Axis Securities have maintained positive ratings on the stock, with target prices of Rs 545 and Rs 550 per share, respectively.
Key reasons for the positive recommendations:
Overall, ITC's strong performance and positive outlook suggest that it is well-positioned for continued growth in the coming quarters. Investors who are bullish on the company's prospects and believe in the potential for share market investment in ITC may consider adding it to their portfolios.
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