ITC share price surged more than two percent on Tuesday after a positive outlook by CLSA Asia Pacific Markets. The stock was the second-biggest gainer on the Nifty50 index.

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The brokerage firm believes ITC’s valuation is ignoring multiple positives from the fast-moving consumer business.

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“We believe its FMCG business is firmly on the path for a profitable scale-up with multiple value creation opportunities,” said CLSA in a note.

The brokerage firm expects the cigarette maker’s FMCG business to deliver a compounded annual growth rate of 31 percent in its operating profit over FY20-24CL on the back of industry tailwinds, margin levers and improving asset utilisation.

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Unlike in the past, inorganic growth should offer an additional growth lever, the brokerage added.

The stock valuation is compelling with a record-high PE and a six percent dividend yield.

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At 1144 IST, ITC shares were up 1.3 percent at Rs 212.15 apiece on the BSE. They hit an intraday high at Rs 214.25.

ITC’s stock outperformed the benchmark Nifty 50 which fell 0.3 percent on Tuesday.

First Published:Sept 7, 2021 12:33 PM IST