After lighting up the bourses for 2 years, ITC can gain 10% more

Analysts remain bullish on the stock in the absence of negative news flow.

“The biggest thing in ITC is that there are no near-term headwinds for the company,” said Amnish Aggarwal, the head of research at Prabhudas Lilladher.

“The increase in excise duty (for cigarettes) has been very benign, while GST has been stable since it was introduced, and the domestic cigarette industry has been gaining share from the smuggled trade, which has resulted in very strong volume growth for the company in the last few years, which is very positive.”

On technical charts, the stock is set for more gains. This is the fourth consecutive month where the shares have made a higher high-low pattern, and have seen a build-up of bullish positions, said Rajesh Palviya, the head for technical and derivatives research at Axis Securities.

“The kind of breakout that the stock has given is for the first time since 2017, and given the strong momentum, the view is bullish for the long-term as well,” he said.

Investors can consider buying the shares at the current levels for a target of ₹440 with a stop loss of ₹370, he said.While ITC, which has gained over 47% in the past year, is the best performer on the Nifty 50, valuations remain attractive at about 18 times its one-year forward earnings, said analysts

The company’s fast-moving consumer goods business is expected to see an improvement in margins, while the hotel industry is also expected to revive after being hit on account of the COVID-19 pandemic in recent years.