ITC share price at over 7-month high, breaks out consolidation; what’s driving the rally?

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September 16, 2021 2:52 PM

ITC share price surged over 8 per cent to Rs 233.50 apiece intraday on BSE, on expectations of improvement in the business outlook

ITC stock, ITC share price ITC stock has staged a breakout after consolidating for a very long time between Rs 207-217 zone

ITC share price surged over 8 per cent to Rs 233.50 apiece intraday on BSE, on expectations of improvement in the business outlook. The stock is trading near its 52-week high of Rs 239.15, touched in February this year. The stock has witnessed a significant rise in trading volumes. On BSE, 98.15 lakh equity shares have exchanged hands, while a total of 13.41 crore units have traded on NSE so far in the day. ITC has rallied 11.45 per cent so far this month. Analysts attribute this sudden rally on the backdrop of an expected improvement in business outlook. ITC stock has staged a breakout after consolidating for a very long time between Rs 207-217 zone.

Technical analysts say that its immediate resistance is at Rs 231 followed by Rs 238. “Any move above Rs 238 will lead to some more strength and up move in the stock. The support is now at Rs 217. One can enter long with a stop loss of Rs 217 and target of Rs 238 and Rs 265 (the second target is for investors),” Milan Vaishnav, CMT, MSTA, Consulting Technical Analyst and founder, Gemstone Equity Research & Advisory Services, told Financial Express Online.

The upward momentum in this stock is backed by strong valuations and the surge in the stock has been on an expected line as it had remained undervalued for long. Analysts say that the fundamentals of the company are quite strong and in the wake of unlocking theme stocks like ITC which have good financial strength and strong prospects are expected to catch investors’ eyes. “Any possible restructuring in the business would be the biggest positive trigger for the company which might further strengthen its outlook. We expect the stock’s upward trend to continue and therefore investors can remain invested for medium to long term,” Likhita Chepa, Senior Research Analyst, CapitalVia Global Research, told Financial Express Online.

By far, ITC stock was lagging behind in terms of performance. So, from a valuation perspective, this is one of the cheaper consumption-theme stocks in the FMCG space. “As per information provided by company officials, they are not ruling out a possibility of restructuring different business including demerger of hotel and even listing of ITC Infotech,” Aprajita Saxena, Technical Research Analyst, Trustline Securities, said. She also added that this would enable value unlocking of hotels and other businesses. “It is expected that spin-off businesses would get a better valuation going ahead. Lower lockdown impact and the faster recovery trends seen in cigarettes are positives and rising FMCG business profitability would offer incremental upside potential,” she said.

(The stock recommendations in this story are by the respective research analysts and brokerage firms. Financial Express Online does not bear any responsibility for their investment advice. Capital markets investments are subject to rules and regulations. Please consult your investment advisor before investing.)

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