83.6% annual jump in ITC share prices. Find out why and what experts have to say

Expert analysis of ITC share price rise

annual jump in ITC share prices

While the stock market is on a roller-coaster ride, the prices of ITC’s shares are consistently performing well. An Indian conglomerate headquartered in Kolkata, ITC has been delivering outperforming returns as its share prices keep growing. Over the last year, while Nifty rose just 7.3%, ITC’s shares rose 83.6%, yielding attractive returns for investors.

Why the rise in stock prices?

Many reasons are driving the rally in ITC share prices. Have a look –

  • Good and stable financial results

The company’s financial performance has been good and strong over the past couple of years. In the latest Q3 results for the financial year 2022-23, the company’s net profits jumped 23.1% YoY to stand at Rs.5070 crores. The revenue from operations also increased 3.6% YoY and amounted to Rs.19,021 crores. All the segments of the brand registered growth in their figures except the agriculture segment. The strong performance from all the segments contributed to a good overall financial performance.

  • Lucrative financial valuations

While ITC’s share prices have jumped considerably, experts believe they are still undervalued and will continue to grow. While the average Price-Earnings (PE) Ratio of the sector is 31.6, the company’s ratio is 26.1 meaning there’s room for further growth.

  • Support from the government 

The government put an emphasis on the development of the agriculture sector in the recent Union Budget. This has become good news for ITC, which has a considerable stake in the sector. The budget has also increased the taxes on cigarettes and has recommended measures to eliminate the sale of illicit cigarettes, both of which are expected to favour ITC, which is in the business of cigarette manufacture and sale.

Related - Find out how ITC's share reacted after the Budget announced cigarettes to get expensive

  • Dividend income

ITC recently declared an interim dividend of Rs.6 per share, which is higher than the dividend of Rs.5.25 declared last year. Increasing dividends also continue to attract investors who want to earn additional returns on their investments.

Expert analysis on price rise

Most experts and analysts have maintained a ‘Buy’ rating on ITC’s scrip, emphasising the increasing share prices. Here are their views –

  • The target price ranges from Rs.438 to Rs.450
  • Experts believe that the increasing dividend declarations, good valuations and stable operational capacity will boost the share prices in the coming months.
  • Some experts say there has been a demand revival of ITC’s products. That, coupled with growth in volume in recent times and the company’s efficient execution capacity, would boost the share prices further.
  • The company’s core cigarette business and a good market share in the consumer goods sector would increase share prices.

So, potential investors can invest in ITC while existing ones can book their profits or continue to hold onto the shares for more returns as ITC shares continue on their upside trend.

Related - Here are the main indicators to find out undervalued stocks

Watch this video to know whether you should buy ITC shares or not.

Disclaimer: This article is intended for general information purposes only and should not be construed as investment or legal advice. You should separately obtain independent advice when making decisions in these areas.


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