ITC to cross Rs 500 mark, may see more gains in next few sessions

economictimes.indiatimes.com:

Shares of ITC are set to cross the ₹500-mark over the next few sessions and could gain another 10% from there, but experts said that investors should consider buying at the current levels only if they are willing to hold for a longer period. ITC shares tested a lifetime high of ₹493.7 on Thursday before closing as the best performer on the Nifty with nearly 3% gains at ₹491.50. The conglomerate also became the seventh Indian company to cross a market capitalisation of ₹6 lakh crore.

Apart from its flagship cigarettes business, ITC also has a presence in hotels, paper products and fast-moving consumer goods. Market buzz that the company is likely to signal the timing of the de-merger of its hotel business at its annual general meeting on August 11, along with the strength in the broader market, drove the gains in the shares, analysts said. The benchmark Nifty 50 rose 0.7% on Thursday to end at a lifetime high of 19,979.15 points, higher by 146.00 points.

Of this, a 30-point contribution came from shares of ITC. «Earnings from the cigarettes business was going into the capex for hotels. Now that the capex is done, and the (hotels) business is doing extremely well even compared to pre-Covid levels, so it is a good time to demerge,» said Amit Kumar Gupta, the founder and chief investment advisor at Fintrekk Capital.

ITC, which in 2021 was at the receiving end on social media because of the sideways moves in the share price for a prolonged period, has emerged as an outperformer in the past 15 months. The stock has gained almost 130% since February 25, 2022 as against the Nifty's gains of 20% in this period. While this has driven the valuations of the company to multi-year highs of around 30 times its one-year forward