Investors in ITC, a leading cigarette and FMCG company in India, were celebrating today as the company’s share price crossed a major milestone. For the first time ever, ITC shares breached the ₹500 mark, reflecting a surge in investor confidence. This positive sentiment comes on the back of the recent budget announcement, where the government decided to leave tobacco taxes unchanged.
The lack of increase in tobacco taxes was a major relief for ITC. The company’s stock price jumped nearly 4% on Wednesday, extending its gains from the previous day’s rally. During intra-day trading, the stock even reached a new high of ₹510.60. This upward trend comes after a strong performance for ITC in recent months. Over the past year, the company’s share price has increased by 10.5%, with a significant jump of 19% observed just in July.
This positive outlook for ITC can be attributed to several factors. Firstly, the decision by the Finance Minister to maintain the status quo on tobacco taxes provided much-needed stability for the company. A significant hike in these taxes was implemented last year, and investors were worried about a repeat this time around. The absence of such a hike has instilled confidence in the future prospects of ITC’s core business segment.
Secondly, the budget also included positive measures for other sectors relevant to ITC’s operations. The government’s focus on rural development is expected to boost demand for the company’s FMCG products, which cater to a wide range of consumers in rural areas. Additionally, the stability in GST rates provides a predictable business environment for ITC.
This positive turn of events has been further amplified by the actions of brokerage firms. Jefferies, a leading financial service provider, upgraded ITC’s stock rating to “buy,” reflecting their belief in the company’s future potential. This upgrade from a neutral rating signifies that Jefferies now recommends investors to purchase ITC shares.
The combined effect of these factors has been a surge in investor interest in ITC. The company’s strong performance in the cigarette segment, coupled with the growth potential of its FMCG business and the supportive government policies, has made ITC an attractive investment proposition.
While the future remains uncertain, the current scenario paints a bright picture for ITC. The company’s ability to navigate the challenges of the tobacco industry, combined with its diversification into other sectors, has positioned it for continued growth. With its share price reaching new heights, ITC is likely to remain a key player in the Indian stock market.