ITC shares make a U-turn near Rs 400 level, should you book profit?

A marginal consolidation/profit booking in ITC shares is obvious after a steep run-up, analysts pointed out. The blockbuster stock of 2022 – ITC has gained nearly 47 per cent in the last one year and is up almost 19 per cent year-to-date (YTD).

ITC Limited has shown a consistent good growth in the cigarette business - Image Source: Reuters

Shares of ITC Limited – a cigarette-to-hotel conglomerate – have been hovering around Rs 400 levels, which analysts see it as an important psychological level. The stock earlier this week on April 11, 2023, touched a fresh lifetime high of Rs 398.20 per share on the BSE.

On Thursday, ITC shares are volatile and trading near the opening level of Rs 395 per share, up around 0.5 per cent as compared to the previous day’s closing of Rs 393.5 apiece on the BSE.

A marginal consolidation/profit booking in ITC shares is obvious after a steep run-up, analysts pointed out. The blockbuster stock of 2022 – ITC has gained nearly 47 per cent in the last one year and is up almost 19 per cent year-to-date (YTD).

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Choice Broking Executive Director Sumeet Bagadia believes that consolidation of around Rs 15-20 in the stock is likely with strong support at Rs 373-380 levels after an extensive rally in the stock lately. He, however, is bullish on ITC with respect to both strong fundamental and technical outlooks.

He added that Rs 400 is a key psychological level and once this is breached, the stock may hit targets of Rs 425, 440 per share in the next one-two month. Bagadia is of the view that ITC shares may breach this important level of Rs 400 in the coming weeks by April-end. He recommends ‘hold’.

Echoing the same views of Bagadia, market expert and TradeSwift Director Sandeep Jain advises investors to ‘hold’ ITC stock as it may soon breach the Rs 400 level. He also believes the stock is trading at attractive valuations and has strong fundamental and technical views.

Jain lists out important triggers such as the de-merger perspective and upcoming IPO (Initial Public Offer) of the company’s IT arm – ITC InfoTech among others, which make this stock attractive. Even he believes that consolidation in the stock after an extended rally in the stock is possible.

While Sharekhan reiterates a ‘buy’ call on ITC with a target price of Rs 450 per share on the back of attractive valuations at 23x/21x its FY24/FY25E EPS and double-digit earnings growth visibility makes ITC a preferred pick in the large consumer goods space from a medium to long-term perspective.

Consistent good growth in the cigarette business, strong tailwinds in the hotel business, and scale-up in the non-cigarette FMCG business make its earning visibility better compared with peers, the domestic brokerage said in its report on the FMCG major.

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(Disclaimer: The views/suggestions/advices expressed here in this article is solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)

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