ITC Shares Rally Over 37% So Far This Year. Here is Why

ITC shares hit its one-year peak on Thursday amid talks about an organisational restructuring at the conglomerate, including demerger of hotels business and listing of its technology venture in the future.

At its annual general meeting on Wednesday, the company had said it will continue to deliver robust growth despite concerns such as inflation.

The stock of the FMCG major climbed 1.37 per cent to its 52-week high of Rs 302.20 in intra-day trade on the BSE. It ended at Rs 299.50, up 0.47 per cent.

On the NSE, it gained 0.41 per cent to settle at Rs 299.45 apiece.

In the past one month, the stock has jumped nearly 11 per cent. In comparision, the 30-share BSE Sensex has climbed nearly 6 per cent during the period.

The company's share price had been stuck in a range of Rs 200-225 for a long time before it started inching up around March this year and breached the Rs 300-mark in intra-day trade on Thursday.

Shares of ITC have rallied 37.38 per cent so far this year while the BSE benchmark has declined 4.41 per cent during the period under review.

The FMCG company commands a market valuation of Rs 3,69,797.85 crore on the BSE.

Speaking at the company's AGM virtually, CMD of ITC Sanjiv Puri on Wednesday said that in the FMCG space, the firm has nurtured 25 brands and the newer ones will garner an annual consumer spend of Rs 24,000 crore.

"... it is immensely encouraging that your company's newer FMCG businesses have garnered an annual consumer spend of Rs 24,000 crore. The carefully selected portfolio, with substantial headroom to grow, is estimated to have a total addressable market potential of Rs 5,00,000 crore by 2030, which is amongst the highest in the Indian FMCG space," he said.

According to reports, ITC Chairman Sanjiv Puri on Wednesday also reiterated that the conglomerate is open to organisational restructuring that would include demerger of hotel business and listing of its subsidiary ITC Infotech in future.

The traditional business segment of cigarettes also recovered during the year with normalisation of economic activity and is now ahead of the pre-pandemic levels, Puri had said.

"ITC AGM key highlight was the total FMCG portfolio's addressable market potential of Rs 5 lakh crore by 2030. This is the highest for any Indian FMCG company and provides a huge runway of growth for ITC's FMCG division," Santosh Meena, Head of Research at Swastika Investmart Ltd, said.

Meena also said cigarette volumes have recovered and surpassed the pre-Covid levels. In short, the company is firing on all cylinders, he added.

"ITC has been one of the best performers this year rising 36 per cent compared to a negative 6 per cent return of the Nifty-50," Meena said.

Deepak Jasani, Head of Retail Research, HDFC Securities, said ITC has not only outperformed its FMCG peer group but has also been the top performer in Nifty after M&M in 2022.

"This has been a result of strong performance across all its segments despite inflationary pressures and demand slowdown coupled with supportive valuations," Jasani added.