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Jayanta Mallick

KOLKATA, July 25

THE ITC stock closed marginally lower on the National Stock Exchange on the eve of its 91st AGM scheduled for Friday. But, the stock finished fractionally higher on the Bombay Stock Exchange. Total volumes on the BSE and NSE were around 6.58 lakh shares on Thursday. The respective closing prices on the BSE and the NSE were Rs 619.55 and Rs 618. The day's low on the both exchanges was Rs 618.

According to brokers, after the counter reached its recent peak on July 7 at around Rs 714, it has been seeing a declining trend in prices. Its 50-day moving average price is placed at around Rs 642 and the last two months' average daily volumes on the NSE were 3.60 lakh shares.

According to some market analysts, the sentiment in the counter was depressed for various reasons. Mr John Band, an independent analyst, told Business Line from Mumbai that despite `buy' recommendations made by certain FIIs this month, the stock has been going down because non-relevant capex plan announced recently by the company. "The return on capital in the diversification project, including the hotel venture, has been poor so far," Mr Band commented.

The growing social pressure on tobacco use worldwide and the recent ban on certain such items in the country might have had a negative impact on the current valuation of the stock, Mr Ajay Jaiswal of Lohia Securties felt.

However, Mr Jaiswal pointed out that the cash flow and cost maintenance track record of ITC is enviable. Incidentally, on its portal earlier this month, the company has announced a capital expenditure plan of Rs 600 crore a year for the next two to three years. (Both Mr Band and Mr Jaiswal have disclosed that they do not hold the ITC stock.)

Further, some brokers were apprehensive that the first quarter financial performance of the company may not meet the market expectation of 18 per cent topline and 10 per cent bottomline growth.

Market insiders maintain that the known operators in the counter have of late remained inactive indicating reduction in their exposures in view of UTI shelving its proposals to offload its stake for the time being.

As on June 30, out of a total institutional holding of 47.11 per cent, MFs and UTI held 13.23 per cent, while FIIs held 10.54 per cent. Foreign companies held 32.5 per cent. The public holding was at 14.45 per cent.

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