ITC up 2%, hits record high; stock gallops over 19% from Budget Day low

Shares of ITC traded on a buoyant note in Thursday’s intra-day trades, with the stock hitting a new summit at Rs 393.35 on the BSE. At 11:50 AM, the stock was up 2 per cent at Rs 392 on trades of around 7.26 lakh shares as against the two-week daily average volume of around 3.45 lakh shares on the exchange.

Meanwhile, the S&P BSE Sensex was up 0.2 per cent at 59,838. Along with ITC, the BSE FMCG index too was seen outperforming the benchmark index and was up 0.9 per cent at 16,489.

In the December quarter, ITC had a reported 23.4 per cent jump in net profit at Rs 5,007 crore on a year-on-year basis. Total income too was up 3.6 per cent YoY at Rs 19,021 crore.

Commenting on Q3 earnings the company’s management said that the economic activity continued to gather momentum with sequential moderation in commodity inflation, even as core inflation remained elevated. However, rural demand continued to be relatively subdued, they said, while improving sequentially.

“The volume stability in taxes on cigarettes, backed by deterrent actions by enforcement agencies, continued to enable volume recovery for the legal cigarette industry from illicit trade leading to higher demand for Indian tobaccos,” the release added.

The recent rally in the stock has been in spite of a proposed tax hike on select cigarettes. Most analysts believe that the proposed tax hike is not very high and would be easily passed on through small price increases.

On the Budget Day, February 01, the stock had hit a panic low of Rs 329.10 following the take hike announcement. However, the stock eventually ended 2.6 per cent higher at Rs 361.40 on the same day backed by aggressive volumes.

When compared to the Budget Day’s low, the stock has galloped over 19 per cent so far this month. Whereas, the BSE Sensex has gained 1.7 per cent from its Budget Day low.

Meanwhile from the BSE FMCG constituents, shares of Agro Tech Foods and Advanced Enzyme Technologies have soared 4.5 per cent each. Godfrey Phillips and Globus Spirits rallied around 3 per cent each. ADF Foods, Hatsun Agro, Ugar Sugar, Bajaj Hindusthan and KRBL were up over 2 per cent each.

Shares of FMCG companies were pressurized off late amid fears of the likely impact of El Nino factor.

“During the concluded quarterly results commentary from some of top FMCG majors have been that they are witnessing some green shoots in rural markets as inflation has cooled off a bit. However, the adverse weather conditions could be a roadblock to this recovery. Rainfall deficit is a major cause of the rural slowdown because it affects crop sowing and farm income. Hence, El Niño conditions, if they happen, remain a key monitorable going ahead,” Avinash Pathak, Research analyst at LKP Securities said.