FMCG giant ITC share price has continued to gain momentum, ending the trading week of September 16-20 on a positive note. The large-cap stock is currently near its all-time high and has surged by 10.20% year-to-date.
ITC Share Price:
On Friday, September 20, ITC share price ended at Rs 514.90 apiece, up by 1.32% on BSE. The market cap stood at Rs 6,43,907.42 crore.
The stock is currently less than Rs 6 away from hitting its all-time high of Rs 514.90 apiece, while it traded higher by 29% from its 52-week low of Rs 399.30 apiece.
ITC's price-to-equity ratio is at 31.46x, while its return on equity is strong at 28.29%. In the first half of 2024, ITC shares were broadly in red or witnessed significant correction, however, the stock of the second half of the year has been robust for the company, especially after Union Budget 2024 outcomes. ITC shares rebounded and are now up by 10.20% YTD on BSE.
But does that make ITC overvalued?
As per Alpha Spread, the intrinsic value of one ITC stock under the Base Case scenario is 272.01 INR. Compared to the current market price of 514.4 INR, ITC Ltd is Overvalued by 47%.
Should You BUY or Sell ITC shares?
As per Trendlyne data, the consensus recommendation from 34 analysts for ITC Ltd. is BUY. EPS is expected to grow by 6.2% in FY25. The average 1-year target price on ITC is at Rs 541.09 apiece, which hints at nearly 5.2% upside ahead.
However, in the long term, ITC has the potential to give strong double-digit returns.
After the Union Budget 2024 announcement, brokerage Jefferies has upgraded its stance in ITC from 'HOLD' to 'BUY'. In its note, the brokerage stated that 'No news is great news'.While upgrading ITC stock to buy, Jefferies stated that it is a clear winner with the government leaving tobacco taxes unchanged. The brokerage sets a target price of Rs 585 on ITC.
Meanwhile, Motilal Oswal has recommended BUY on ITC for a target price of Rs 575. Also, Nuvama maintained BUY for a target price of Rs 580 per share.
While recommending to Accumulate ITC stock, brokerage Way2Wealth believes the FMCG business is expected to recover given the government push on infrastructure and lower commodities, the expected uptick in rural demand and scale economies. ITC continues to expand the distribution network and increase penetration. We remain positive on the growth prospects of the company.
ITC is set to demerge its hotel business which will be in the ratio of 1:10. Because as part of the merger process, for every (Ten) Ordinary Share of the face and paid-up value of Re. 1 each held in ITC, 1 (One) equity share of the face and paid-up value of Re. 1 in ITC Hotels. After the completion, ITC's stake will be reduced. The shareholders of ITC will hold about 60% of ITC Hotels directly, which is proportionate to their shareholding in ITC. The balance stake of about 40% will be held by ITC.
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