Tortoise wins the race! ITC breaks record to turn Nifty topper

NEW DELHI: Reminding investors of the famous Aesop fable ‘The Tortoise and the Hare’, ITC which was once mocked through social media memes for being as slow as a tortoise is now breaking all records. The stock, which is on its way to entering the elite club of top 10 companies in India, is now the highest gainer in Nifty this year.

ITC shares, which hit a 52-week high of Rs 293.30 on Monday, have so far rallied over 33 per cent in 2022. As a result, the cigarettes-to-hotels conglomerate is now the top performer in Nifty pack on a year-to-date basis. Some of the superstar stocks of the gravity-defying pandemic rally, on the other hand, have eroded wealth in double digits with no takers.

The stock of the Kolkata-based FMCG company, that derives over 80 per cent of its profits from cigarettes, was a favourite of many value investors who loved it for its strong and consistent free cash flow generation, insulation from inflation as well as high dividend yield of 4-5 per cent.

Going by the momentum in ITC, the stock is also poised to enter the elite club of top 10 companies in India based on market capitalisation. With a market cap of Rs 3.6 lakh crore, ITC is now at the 11th spot behind Bharti Airtel (Rs 3.7 lakh crore). It has left Bajaj Finance and Kotak Mahindra Bank behind in recent days.

Dalal Street's bullishness on the stock is evident with the fact that out of 30 analysts covering the stock, a vast majority of 21 have strong buy ratings, Trendlyne data shows. Interestingly, none of them have a sell call on ITC.

The highest price target goes up to Rs 351, the data shows.

Independent market expert Sandip Sabharwal said ITC’s businesses like that of hotels or even the paper businesses are in a sweet spot. “I think all of them are making very good money now given the dynamics of those businesses. The cigarette business should be doing well given the way the reopening is happening. Smaller ticket items are coming back sharply. In the last quarter, their FMCG business, ex of cigarettes, also showed improvement which was slightly unexpected,” he said.

Neeraj Dewan, Director, Quantum Securities, says ITC can be part of investors who are looking for some defensive stocks. “I think over the next couple of years, I am not expecting ITC to give exceptional returns but it will definitely give you 15 per cent to 17 per cent kind of return,” he said.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)