We believe that shares of ITC could be under pressure in the near term amid a large supply of shares after an expected 3.5% stake sale by British American Tobacco (BAT). A near term top seems to be in place around Rs. 500-odd levels which happened just before the announcement of the demerger of the hotel business into a new entity in August 2023. However, we remain constructive on the company from a medium to long term perspective owing to its strong brand recall and enormous runway for its FMCG business ahead. With inflation expected to moderate further ahead, especially the rural side, we expect volumes in the overall business to come back as we move forward. At the current valuation, we believe that most of the negatives are already priced in and investors could start considering adding the stock to their portfolio at every dip.
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