Over 1.5 lakh small investors exited from ITC during the January-March quarter, even as foreign portfolio investors (FPIs) bought it. According to the latest shareholding pattern, retail investors’ holding slipped to 12.06 per cent from 14.31 per cent. On the other hand, FPIs’ holding moved up to 11.99 per cent from 9.99 per cent.

According to market experts, retail investors fell prey to “memes” circulating on the ITC stock, as it was largely hovering around ₹220 for most of 2021. As the stock started climbing up in March this year, some retail investors, who were stuck in it for long, preferred to exit, said analysts.

The number of small investors reduced to 27.94 lakh at the end of March from 29.50 lakh (in December 2021).

Change of fortune

The steady accumulation by FPIs seems to have changed the fortunes of ITC shares. The stock climbed sharply and hit a 52-week high of ₹273.10 on Monday, but closed at ₹267.30, down 0.19 per cent, over the previous day's close.

Except FPIs, other categories such as mutual funds, insurance companies and high net worth individuals have pared their holding in ITC.

LIC cuts stake

Life Insurance Corporation, which had a stake of 16.23 per cent at the end of December 2021, reduced it to 15.84.

Overall insurance holding in ITC got reduced to 21.05 per cent from 29.50 per cent. MFs’ holding slipped to 10.09 per cent (10.70 per cent); during the quarter, 22 MFs exited from ITC to the current 308 (330).

Analysts bullish

According to analysts, the outlook for ITC looks bright given the earnings visibility. Domestic brokerage Emkay Global, which retained Buy rating on ITC, said, “We now value it at ₹304 (₹270 earlier), raising the multiple to 19x (vs 17x for standalone business), factoring in better earnings visibility.”

Centrum Broking, in a recent research report, said, with the fading effect of Covid, we expect recovery in demand for out-of-home consumption, hotels, paper board, yet agri export presents more opportunities for the company.

“We believe benign tax ruling in the recent Union Budget, coupled with new cigarette products, could drive volumes; further, the company announced interim dividend of ₹5.25/share. Stable taxation and reasonable valuations make the stock more attractive and set for re-rating,” it said, adding, “We have a Buy rating and DCF-based target price of ₹341 (implying 23.3x FY24 EPS).”

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