ITC Shares Up 10% This Week Even After Clarification On Demerger News
ITC in filings to the exchanges on Wednesday said that "we write to advise that the news item under reference is speculative in nature."
Shares of ITC Limited are up 10% this week, even after the FMCG to hotels major on Wednesday clarified on the demerger news. On Friday, the shares of ITC went up 4% at Rs 226 in a firm Mumbai market, after Morgan Stanley, in its report, gave an 'overweight' ranking to the stock with 15% upside potential in the next 12 months to a price target of Rs 251.
After reports of demerger, ITC in filings to the exchanges on Wednesday said that "we write to advise that the news item under reference is speculative in nature."
"We draw your attention that if and when there is any material development with respect to the Company's affairs, the Stock Exchanges are kept advised, pursuant SEBI regulations, read with the Company's Policy for determination of materiality of events and information for disclosure to the Stock Exchanges," said ITC in reply to the exchanges.
The market was abuzz that ITC is headed for demerging its FMGC and hotels business, which has enhanced investors' appetite for the company's shares.
Analysts believe that ITC trades at a considerable discount to its peers despite solid fundamentals.
"Valuations remain attractive, but more importantly, we expect moderate tax increases over the medium term to bring profitability back to the cigarette business. The market has not priced this in, in our view," said Morgan Stanley in a research report.
The FMGC to hotels major reported an 11.4% dip in its consolidated net profits for the third quarter ending December to Rs 3587.09 crore.
The company attributed the fall in profits to slower sales growth and a more flawed hotel industry amid the COVID-19 pandemic.
ITC shares closed up 2.62% for the fifth straight session on Friday at Rs 223.10.
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