ITC share price spikes 4%; ace investor Porinju Veliyath is reason why

ITC share price rallied 4 per cent on Wednesday after ace investor Porinju Valiyath said he has picked some stake in the FMCG company. The stock rallied as much as 3.9 per cent to Rs 278.10 and was the top gainer on Sensex and Nifty. "ITC is at an inflection point and investors who want to generate reasonable 15-20 per cent compund annual growth rate (CAGR) returns for the next five years should enter now, said Porinju Valiyath in an interview to CNBC-TV18. Valiyath believes consumption is still the best theme to play in the country, and ITC is available at the lower band of valuation range in the space.

ITC share price has underperformed the Sensex and Nifty in the last one year, losing 0.4 per cent against over 17 per cent gains on Sensex and Nifty. On a year-to-date basis, however, the stock is up over 5 per cent against just 1 per cent gains on Sensex.  Life Insurance Corporation of India holds 16.22 per cent stake or 1,97,50,75,980 shares of ITC, latest shareholding data filed on exchanges showed. 

ITC is yet to declare to its March quarter results for financial year 2018. Brokerage Motilal Oswal Securities expects ITC’s sales to come in flat YoY (with flat cigarette volumes). "Cigarette gross sales were up 6% in the base quarter, while net sales were up 21 per cent due to very low excise. Consequently, we expect an 8 per cent YoY decline in cigarette net sales in 4QFY18. Adj. PAT for the company is expected to grow 6.9 per cent YoY," it said.    

Motilal Oswal has a neutral rating on the stock. 

Last week, Porinju Veliyath bought 1,50,000 shares of Agro Tech Foods at Rs 650 per share, NSE's bulk deal data showed. Reacting to this, the stock of the company jumped 5 per cent. Agro Tech Foods is engaged in the business of marketing food and food ingredients to consumers.

Valiyath is popular for picking smallcap multibaggers.