ITC downgraded to 'Hold' by MarketsMOJO, despite strong fundamentals and bullish trend

ITC, a largecap company in the cigarettes/tobacco industry, has recently been downgraded to a 'Hold' by MarketsMOJO on October 4th, 2024. This decision was based on various factors, including the company's strong long-term fundamental strength with an average Return on Equity (ROE) of 23.77%, healthy long-term growth with an annual net sales growth rate of 7.46%, and a low debt to equity ratio of 0 times.
Technically, the stock is currently in a mildly bullish range, with multiple factors such as MACD, KST, DOW, and OBV indicating a bullish trend. Additionally, the company has a high institutional holding of 84.53%, which suggests that these investors have better capabilities and resources to analyze the company's fundamentals compared to retail investors.

However, the company's results for the quarter ending in June 2024 were flat, with a ROE of 27.5. This has led to a very expensive valuation for the stock, with a price to book value of 8.5. Despite this, the stock is currently trading at a fair value compared to its average historical valuations.

In the past year, while the stock has generated a return of 15.47%, its profits have only risen by 3%, resulting in a high PEG ratio of 12.9. This indicates that the stock may be overvalued and could potentially underperform in the future.

Overall, ITC has underperformed the market in the last year, with a return of 15.47% compared to the market's (BSE 500) return of 36.68%. With the recent downgrade to a 'Hold', investors may want to carefully consider their options before making any decisions regarding ITC stock.