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ITC Stock- Reasons Behind Surge in Stock Price

ITC Stock- Reasons Behind Surge in Stock Price

Published on 18 September 2021 Views 276 Comments 1

The Cigarette-to-Hotel Conglomerate ITC stock jumped up suddenly by 6.8% on Thursday 16th September 2021. Such a sudden surge in one of the most underperforming stocks has led to curiosity among investors for the reasons behind the same. So let's discuss the possible reasons behind this instance in this short article.

Introduction:

The Diversified Conglomerate ITC witnessed a sudden spike in its share price on Thursday 16th September 2021. On an Intra-Day Trade, the share of ITC surged by 8.1% while on a closing basis, the scrip was up by 6.8% and closed at 230.75 on BSE. The Stock also marked the 7-Months High Levels of Rs. 233.50 yesterday. The company marked the 52-Week high Levels of Rs. 239.15 on February 9, 2021.

Reasons:

  • As of now, there were no official concrete reasons behind the surge in the stock price on Thursday.
  • But the only supported reason behind this rise in stock price is the Grapevine that there might be some restructuring in the company’s business
  • Very often there were discussions recommendations by the institutional investors to the company to de-merge their businesses.
  • Hence, the demerger of the business of ITC may lead to value unlocking opportunities.
  • ITC has been badly criticized for the past few years due to its not-so-perfect capital allocation which the company itself has addressed.
  • At the same time, the consistent improvement in the EBITDA and EBITDA Margins of the company’s FMCG and Agri-Business may also prove to be the basis of re-rating of the stock.
  • Although the prime reason behind today’s surge in the stock price is due to the mismatch of the demand-supply equation wherein Demand was very high as compare to the supply.

Conclusions:

Overall, the consensus of many big institutional investors, broking houses, and other market participants for this stock is generally ‘BUY’ or ‘HOLD’, and this factor too looks for one of the reasons for such overwhelming response to the stock. Do proper research and study before making any investment decision or consult a financial advisor.

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