Shares of ITC continued to move north, hitting a fresh high of Rs 416.50, gaining 1% in intraday trade on Thursday on strong earnings expectations.

So far in 2023 (CY23), the fast-moving consumer goods (FMCG) stock in the hotel industry has risen by 25%. In contrast, the S&P BSE Sensex is down 1.2% so far in FY23.

ITC is now the sixth most valuable public company by market cap. So far this calendar year, ITC has climbed seven positions after the company’s share price rose sharply. ITC surpassed Infosys, Housing Development Finance Corporation (HDFC), State Bank of India (SBI), Bharti Airtel, Adani Enterprises and Life Insurance Corporation of India (LIC) in the market capitalisation rankings.

ITC is one of India’s largest diversified companies with interests in the cigarette, fast-moving consumer goods (FMCG), hotel and paper industries.

ITC has performed well over the past few quarters despite an uncertain demand environment and continued inflationary pressure on margins. The strong performance was underpinned by a solid recovery in its core cigarette business (in the post-pandemic era) and solid double-digit growth in its non-cigarette FMCG business. It accelerated growth in its hospitality, paperboard, paper and packaging (PPP) business.

According to the management, the FMCG business in the December quarter (Q3FY23) witnessed strong growth in both channels and markets (urban and rural), driven by expanded store coverage, improved penetration and last-mile execution. As seen in the past, the stabilisation of cigarette taxes, backed by deterrent actions by law enforcement agencies, has continued to allow the legal cigarette industry to recover volumes from the illicit trade, leading to higher demand for Indian tobacco and increased fiscal revenue for the tobacco sector, the management said.

Brokerage firm Sharekhan maintained a ‘buy’ call on the stock with an unchanged target price of Rs 450.