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Business News›Markets›Expert Views›What’s driving the move in ITC? Should you buy it?
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What’s driving the move in ITC? Should you buy it?
Synopsis
“Valuation wise, the ITC stock has always remained undervalued. Cash flow wise, ITC has always produced a higher amount of cash and free cash which has just given work to so many other businesses. Given there are no hurdles both on the investing side as well as on the business side, money has started coming into ITC and that is where we have seen the action”
ETMarkets.com“Given there are no hurdles both on the investing side as well as on the business side, money has started coming into ITC and that is where we have seen the action,” says Deven R Choksey, MD, KRChoksey Holding.
- The Nifty year to date is down about 2.5%, ITC - a meme stock, is higher by 16% YTD. Is ITC having the final laugh after being a lame dog for so long?
The main issue with ITC has always been the cigarette business. Most of the global funds would probably not touch ITC because of its bad effects on health. The situation has not completely changed. However, ITC has diversified into other businesses and is becoming a carbon neutral business. So those ESG funds, which till now, were not touching ITC because of moral issues, have now started looking at ITC more favourably. - Which businesses of ITC are likely to grow now?
The current environment, its agri business and IT business are likely to grow very very well and with the unlocking of the economy, even the hospitality business is expected to do much better than what it has done in the last two years. Given those rationales and given no hurdles both on the investing side as well as on the business side, money has started coming into ITC and that is where we have seen the action. - Has ITC appreciated enough?
As of now, the stock is basically getting rerated though appreciation has still not come. It has the potential for much higher appreciation, should they demerge some of their businesses like FMCG. I think they will be doing a substantial amount of value unlocking in the business. So we will have to wait for that possibility. The negatives are being addressed with some amount of positivity as far as the agri business is concerned.
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(What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2024 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)
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