Why ITC Share Price is Rising

The FMCG sector painted a rather stagnant picture for most of 2024. Stuck in a rangebound pattern, the BSE FMCG index has only managed a modest 7.6% increase year-to-date.

This lackluster performance stands in stark contrast to previous years, where FMCG stocks were known for their steady growth. High inflation and stagnant consumer spending have kept a lid on demand, contributing to the sector's subdued performance.

However, a recent shift in sentiment seems to be brewing. Over the past month, the index has shown signs of life, climbing a significant 6.9%. This positive momentum has continued in the last week, with the index rising a further 4.2%.

This is how the BSE FMCG Index performed in the last year.

Within this revitalized sector, one name stands out: ITC.

Much like the broader FMCG market, ITC's share price mirrored the earlier rangebound trend, gaining a mere 0.6% for most of 2024.

However, mirroring the recent sector surge, ITC's stock has witnessed a remarkable 9.6% uptick in the last month.

This sudden rise raises the question: what's driving this unexpected jump in ITC's share price? Let's delve deeper and explore the potential factors behind this exciting development.

#1 Sectoral Tailwinds

Industry experts predict a gradual recovery in the FMCG sector. This recovery is driven by a revival in rural demand and signs of improvement in volume and margins.

The outlook for the FMCG sector remains positive. A steady economy and consistent urban consumption are key drivers for future growth. The sector appears ready for medium to long-term gains.

A normal monsoon is expected to support rural demand, vital for the sector's health. Management comments from major FMCG companies show stable urban demand. There are early signs of rural recovery. Easing consumer price inflation and potential support for farmers in upcoming policies also bode well for the sector's future.

FMCG product demand improved during the April-June quarter of FY25. Summer-related items like cold beverages, prickly heat powder, and glucose saw increased sales due to severe heat in northern and central India. However, the heatwave negatively impacted hot beverages and household insecticides.

Reviving rural demand is crucial for the FMCG sector. Companies are hopeful that a favourable monsoon will boost the rural economy. The sector is showing signs of recovery in rural areas, supported by reduced inflation and strategic measures to increase volumes.

Urban consumer volume growth is expected to remain steady. Rising disposable incomes and a focus on premium offerings, especially in personal care and home care, will support this.

The sector will also benefit from modest price increases in key food and beverage raw materials like sugar, wheat, edible oil, and milk.

The overall positive sentiment around FMCG sector has boosted ITC share price.

#2 Upcoming Quarterly Results

For the April-June quarter of FY25, analysts expect ITC to report strong results. The company is anticipated to see stable-to-improving volume and value growth trends in its core FMCG segments.

ITC's diverse portfolio includes packaged foods, personal care, and other consumer goods, which are likely to benefit from increased consumer demand during the summer months.

ITC has experienced favourable raw material cost trends. There has been a sequential decline in crude and palm oil prices. This helps in maintaining or improving profit margins.

Inflationary pressures on agricultural products like milk, sugar, and wheat are being managed effectively. Stability in chemical prices also positively impacts ITC's cost structure.

The company's strong fundamentals, combined with favourable market conditions, position it well for posting good quarterly results. The company will declare results on 1 August 2024.

How ITC Share Price has Performed Recently

In the past five days, ITC share price is up 3.3%. In the last month, it has surged 11.7%.

In 2024, so far its share price is up 1.1%. Additionally, its down 1.2% in the last one year.

The stock touched its 52-week high of Rs 499.6 on 24 July 2023 and a 52-week low of Rs 399.3 on 12 March 2024.

About ITC

ITC is India's biggest cigarettes & one of the largest fast-moving consumer goods (FMCG) company.

It has 78% market share in cigarettes and presence in other business segments such as staples, biscuits, and personal care products.

The company is also present in paperboard, printing & packaging business.

The company completed 100 years in 2010 and it employs over 36,500 people at more than 60 locations across India and is part of the Forbes 2000 list.

To know more, check out ITC company fact sheet and quarterly results.

For a sector overview, read our FMCG sector report.

You can also compare ITC with its peers:

ITC vs VST Industries

ITC vs Godfrey Philips

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

Happy Investing.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...