ITC - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 4.3
| Stock Code | ITC | Market Cap | 3,93,168 Cr. | Current Price | 314 ₹ | High / Low | 456 ₹ |
| Stock P/E | 19.5 | Book Value | 54.7 ₹ | Dividend Yield | 4.57 % | ROCE | 36.9 % |
| ROE | 27.9 % | Face Value | 1.00 ₹ | DMA 50 | 357 ₹ | DMA 200 | 395 ₹ |
| Chg in FII Hold | -1.28 % | Chg in DII Hold | 1.49 % | PAT Qtr | 5,297 Cr. | PAT Prev Qtr | 5,113 Cr. |
| RSI | 26.7 | MACD | -15.6 | Volume | 1,21,08,742 | Avg Vol 1Wk | 3,05,93,182 |
| Low price | 302 ₹ | High price | 456 ₹ | PEG Ratio | 2.11 | Debt to equity | 0.00 |
| 52w Index | 7.70 % | Qtr Profit Var | 5.59 % | EPS | 27.8 ₹ | Industry PE | 46.9 |
📊 ITC demonstrates strong fundamentals for long-term investment. ROCE at 36.9% and ROE at 27.9% are excellent, reflecting superior efficiency and profitability. The debt-to-equity ratio of 0.00 highlights a debt-free balance sheet, which is a major strength. Dividend yield at 4.57% provides attractive income support. The stock trades at a P/E of 19.5, significantly below the industry average of 46.9, suggesting valuation comfort. However, PEG ratio of 2.11 indicates growth is priced in, and RSI at 26.7 shows oversold conditions, pointing to near-term weakness. Current price (314 ₹) is below both DMA 50 (357 ₹) and DMA 200 (395 ₹), reflecting bearish momentum.
💡 Ideal Entry Zone: 300 ₹ – 320 ₹ (aligned with oversold RSI and support levels).
📈 Exit / Holding Strategy: If already holding, maintain for 3–5 years given strong ROE/ROCE and dividend yield. Consider partial profit booking near 420–450 ₹ resistance. Long-term holding is justified due to strong fundamentals and valuation comfort.
Positive
- 📌 ROCE at 36.9% and ROE at 27.9% are excellent.
- 📌 Debt-free balance sheet (Debt-to-equity 0.00).
- 📌 Dividend yield of 4.57% provides strong income support.
- 📌 EPS at 27.8 ₹ supports earnings visibility.
- 📌 Quarterly PAT growth of 5.59% (5,113 Cr. to 5,297 Cr.).
Limitation
- ⚠️ PEG ratio of 2.11 suggests growth is priced in.
- ⚠️ Current price below DMA 50 and DMA 200 shows weak momentum.
- ⚠️ RSI at 26.7 indicates oversold conditions.
- ⚠️ FII holdings declined (-1.28%).
Company Negative News
- ❌ Decline in FII holdings (-1.28%).
- ❌ Weak technical momentum with price below DMA levels.
Company Positive News
- ✅ DII holdings increased (+1.49%), showing domestic confidence.
- ✅ Consistent profitability with PAT growth.
- ✅ Strong dividend yield supports investor returns.
Industry
- 🏭 Industry PE at 46.9 vs stock PE 19.5 highlights valuation comfort.
- 🏭 FMCG and diversified business model provides resilience and steady demand.
Conclusion
🔎 ITC offers excellent fundamentals with strong ROE/ROCE, debt-free balance sheet, and attractive dividend yield, making it a solid candidate for long-term investment. Accumulation near 300–320 ₹ is ideal. Hold for 3–5 years with partial profit booking near 420–450 ₹ resistance, while monitoring growth metrics and institutional investor trends.