Sumary of Why ITC stock is underperforming for long:
- Even after ITC has underperformed for a long time, stock broker Mumbai broker Motilal Oswal believes the share price of the company could continue to languish near its current levels.
- The brokerage is of the view that ITC share will not see any rally since its cigarette volumes and even of other players globally have been on a declining trend, given the increased health consciousness among consumers over the last decade.
- Also, with government having recently set up an expert panel tasked with preparing a comprehensive tax policy proposal for all forms of tobacco from a public health perspective, the overhang of a policy change that may affect cigarette volumes remains on the stock.
- In a report titled ‘Muted cigarette volumes and other FMCG margin pressure weighs on ITC’, Motilal Oswal has accorded a price target of ₹240. ITC is currently trading at around ₹230.”Tapering in-home consumption and sharp commodity cost inflation could affect strong EBIT growth in the other FMCG segment.