Shares of ITC Ltd have lost their momentum in the last one month. The stock is down 13% against a 2% fall in Sensex during the month. The FMCG stock out of its defensive zone and delivered a stellar 121% returns in nearly two years. ITC shares, which stood at Rs 213.95 on February 25, 2022 ended at Rs 473.95 on January 5 this year, more than doubling investor wealth during the period.
However, the rally ran out of steam since January 15. In fact, the FMCG stock has delivered negative returns of 13% in 2024 with one year returns too falling to 6.20% on BSE.
In the current session, the ITC stock fell over 1% intraday to Rs 404.35. Total 6.80 lakh shares of the FMCG firm changed hands amounting to a turnover of Rs 27.76 crore.
Market cap of the firm fell to Rs 5.06 lakh crore. The stock hit its all time high of Rs 499.60 on July 24, 2023 and fell to its 52 week low of Rs 369.70 on March 17, 2023.
ITC stock has a one-year beta of 0.4, indicating low volatility during the period.
In terms of technicals, the relative strength index (RSI) of ITC stock stands at 27.4, signaling it's trading in the oversold zone. ITC shares are trading lower than the 5-day, 20-day, 50-day, 100-day and 200-day moving averages.
Brokerage Jefferies has revised its rating on the ITC stock from ‘buy’ to ‘hold.’ The brokerage expects the firm will likely experience a period of stability without significant movement. It has reduced its target price for ITC shares from Rs 520 to Rs 430.
“We reduce our target multiple on cigarette business to 18 times from 25 times, given the overhang, as highlighted above. Downgrade ITC to Hold, with a revised price target of Rs 430 (vs. Rs 520 earlier)," the brokerage firm said in its report.
Commenting on the technical outlook of the stock, Avdhut Bagkar, Derivatives & Technical Analyst at StoxBox said, "ITC had seen extensive selling pressure following a breach of the 200-day moving average (DMA), steering a negative bias. While the stock has entered the oversold territory, the price continues to observe selling pressure. The trend appears to be slipping towards the 380 level. On the upside, the hurdles of Rs 430 and Rs 445 dampen the favourable trend."
Religare Broking has assigned a target of Rs 385 to the ITC stock. One can fix a stop loss of Rs 418.
"ITC has been under selling pressure for over a month with a gradual rise in volumes. It has witnessed a decisive breakdown from the prolonged consolidation zone with a noticeable surge in volumes," said Religare Broking.
Centrum Broking has a buy call on the stock with a target price of Rs 574. However, the brokerage mentioned key risks such as a sharp rise in taxation, higher leaf tobacco prices, and delayed economic recovery for growth of the conglomerate.
"Strategy refresh, stable taxation for cigarette business, tailwinds for FMCG business, use of data analytics, widening distribution, and cost optimization via supply chain interventions and smart manufacturing are key positives. Though digital transformation and operating leverage would influence margins in our view. We retain BUY rating, with a DCF-based target price of Rs 574 (28.4 times Sept’26E EPS)," said the brokerage.
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