New Delhi: ITC's stocks surged nearly 4 percent to cross the Rs 500 mark for the first time on Wednesday, July 24, following a 5.5 percent increase in the previous session.
The stock's upgrade to a "buy" by brokerage house Jefferies was fueled by the momentum following Finance Minister Nirmala Sitharaman's announcement of no changes in tobacco taxation during her budget address on July 23. Jefferies has established a target price of Rs 585 for ITC, signaling a potential increase of 15.5 percent.
The stock rose by as high as 3.7 percent in intra-day trading, hitting a record high of Rs 510.60. In the last year, ITC has seen an increase of 10.5 percent, with 4.4 percent gained just in the past month. Significantly, the stock has experienced a 19 percent increase in July and has grown by almost 28 percent from its lowest point of Rs 399.30 on March 12, 2024.
The Finance Minister's choice to maintain the current tobacco tax comes after a substantial 16 percent increase in the National Calamity Contingent Duty (NCCD) in the previous year. ITC's stability has led to its status as a top performer on benchmark indices like Nifty 50 and Sensex.
Furthermore, the forecast for demand in the staple sector is getting better. ITC's non-tobacco sectors, like FMCG and agriculture, are expected to be positively affected by an anticipated increase in rural demand. The Finance Minister raised the rural allocation in the Union Budget by 12 percent, which enhances the favorable outlook.
Experts also mentioned that individuals will save around Rs 17,500 in taxes due to the Finance Minister's decision to raise tax rates and increase standard deductions from Rs 50,000 to Rs 75,000 under the New Tax Regime. This is anticipated to be advantageous for companies in the FMCG industry, such as HUL, Dabur, and Nestle, as well as ITC.
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