On Wednesday, ITC shares hit a three-year high of Rs 304.70 in intraday trading, rising nearly 1% on the BSE. The stock has surged 13% in the past month in hopes of healthy gains and foreign investors buying into the stock.

ITC has outperformed the market so far in the calendar year 2022 (CY22), surging 40% amid a buying spree by foreign portfolio investors (FPIs). By contrast, the S&P BSE Sensex fell 6% over the same period. Earlier, the stock hit an all-time high of Rs 353 on July 3, 2017.

That said, FPIs increased their stakes in ITC for the second consecutive quarter. In the first six months of CY22, they bought another 2.69% stake in a diversified fast-moving consumer goods (FMCG) company.

As of June 30, 2022, FPIs holding in ITC increased from 11.99% at the end of March 2022 (Q1CY22) to 12.68%. Likewise, on December 31, 2022 (Q4CY21), FPI held a 9.99% stake in ITC. The data shows that FPIs’ holdings in ITC are at their highest level since the March 2021 quarter, when they held a 12.79% stake in the company.

However, the shareholding of individual shareholders in ITC decreased from 45.24% in Q1CY22 to 44.50% in Q2CY22.

In addition to its near-monopoly in the traditional cigarette business, ITC is India’s leading marketer of FMCG, the clear market leader in India’s cardboard and packaging industry, and has a global reputation for farmer empowerment through its extensive agribusiness business. They are also pre-eminent hoteliers in India with a portfolio of luxury hotels.

Meanwhile, the ITC Board of Directors is scheduled to meet on Monday, August 1, 2022, to review and approve the company’s financial results for the quarter ended June 30, 2022 (Q1FY23).

With sales exceeding pre-pandemic levels, the company’s cigarette business has fully recovered. The stable cigarette tax environment in recent years has allowed ITC to adapt to price increases to avoid demand disruptions. The non-cigarette FMCG business performed well through centralised cost management intervention in the value chain, premiumisation and smart pricing actions.

Analysts at Motilal Oswal Financial Services believe that the recovery in cigarette demand and the FMCG business makes ITC an attractive investment option. “Recovery in cigarette demand, a recovery in some profitable FMCG categories, reduced lag in the hotel business, lower input cost pressures than peers and attractive valuations make ITC a top pick from a one-year perspective,” the brokerage firm said.

For the first quarter of fiscal 2023, the brokerage expects cigarette sales to grow by 11% and expects gross margin to increase by 190bps year-on-year due to a better cigarette mix and fewer hotel delays. Analysts expect cigarette sales, hotel revenue reopening themes, tourism recovery and the outlook for agriculture to be key themes going forward.