Home / Markets / Stock Markets /  ITC share price surges to near 52-week high. Should you buy?
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ITC share price today surged near to its 52-week high of 239 per share as the stock made a surprise rally of 7% in early deals on Thursday after being somewhat of a dull performer amid the recent bull market rally. The cigarette-to-hotel conglomerate's scrip has remained in a rangebound trend and is up around just 8% this year as compared to a nearly 23% rise in benchmark Sensex.

The sudden rise in the counter today comes as a delight for many investors who have been waiting for the stock to rise above its narrow-range for over a year. Stock market experts said that the surge in the stock has been on an expected line as it had remained undervalued for long. They believe that fundamentals of the company are quite strong and in the wake of unlock theme, its revenue is expected to go northward. Also, if there will be any restructuring in the business then it will be the biggest positive trigger for the company for any rerating.

“It's I-day on Dalal street where stocks like Indusind Bank, Idea, Industower, IDFC first bank are zooming but the biggest surprise is the 7% move in the sleeping giant ITC," said Santosh Meena, Head of Research, Swastika Investmart. There is no latest fundamental development for the company but everyone knows the value of the company as it is one of the cheapest counters in the FMCG pack where most of the business verticals of ITC are doing well, he added.

Technically, ITC has witnessed a powerful breakout of double bottom formation which was formed at its 200-DMA however “235-240 is a critical supply zone and if it manages to take out 240 level then we can say that there is a start of a fresh bull run where we can expect the target of 285-300 in the near term. On the downside, 220-215 area will act as a strong support zone," Meena suggested.

ITC shares were highly undervalued as they had not participated in the market rally post-second wave of Covid-19. "This rally can be attributed to the stock specific trade strategy of the market investors who are putting money in the quality stocks available at discounted price. But, the stock hasn't been able to sustain at highs. It has remained range-bound between 200 to 240 for the last 10-month. Fresh buyers should wait and see whether the stock manages to break its jinx and sustains at new highs," said Avinash Gorakshkar, Head of Research at Profitmart Securities.

The stock market participants have also been expecting of the announcements related to the conglomerate's demerger of businesses, which they believe could act as a major trigger for the stock.

Unveiling investment strategy in regard to ITC shares; Ravi Singhal, Vice Chairman at GCL Securities said, "Market is anxiously awaiting fresh breakout at 230 on closing basis. If ITC share closes above 230 apiece today, then only one can buy this counter for 3-month target of 270 maintaining stop loss at 224." He said that there is not much trigger in the market. This rise in the counter is mainly due to the stock quoting at discounted price against its peers like Nestle, Britannia, etc. He said that major trigger that market is expecting is announcement of demerger, which is expected to take place in the company.

The Kolkata-headquartered company had reported a consolidated net profit of 3,343 crore for the quarter ended June as compared to 2,567 crore in the corresponding quarter last fiscal. Its revenue from operations was up 36% to 14,240.76 crore during the quarter under review, as against 10,478 crore in the year-ago quarter.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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