On Thursday, ITC shares hit the Rs 300 mark for the first time since May 2019, having surged more than 10% in July in hopes of better-than-expected earnings for the June quarter. The stock has been underperforming over the past few years.

The stock hit a three-year high of Rs 301.45 per share – last seen on May 24, 2019. The shares were trading at Rs 300 a share on the BSE at 10.15 am, up 1% from their previous close. The stock is up more than 10% in July and 38% this year.

The company has yet to announce a June quarter earnings date. However, 14 analysts at Bloomberg estimated the company’s net profit at Rs 3,985.9 crore on revenue of Rs 15,093.7 crore.

The stock is a good defensive stock in a volatile stock market. Global stock markets, including India’s, was pressured by rising inflation and expectations of tighter monetary policy from central banks. Analysts also worry that a sharp rate hike by the Federal Reserve will lead to a recession.

However, analysts expect ITC to be least affected by the rural slowdown, as its portfolio consists mostly of food. The company offers the best inflation hedge because its core business is completely immune to inflation risk. Investors bought the stock for the second year in a row thanks to a stable tax regime. That gives the company the flexibility to raise prices without affecting demand, analysts said. “We expect this trend to continue, improving cigarette sales and mid-term earnings visibility,” Motilal Oswal Securities said in a note to investors.

Analysts said the agricultural products business outlook had improved substantially following the Ukraine invasion, with the IT vertical expected to continue strong double-digit revenue growth with the highest profit margins. Other businesses, such as hospitality and paper, will likely report strong earnings.

Brokerage firm c said strong growth across all business segments is expected to drive ITC’s total revenue to Rs 86,678.6 crore (17.7% CAGR) in FY21-24. EBITDA is expected to grow at a CAGR of 15.9% to Rs 26,513.4 crore, while net profit is expected to grow at a CAGR of 14.5% to Rs 1,9739.7 crore.

“While valuations of global tobacco peers have returned to pre-pandemic levels (January 19), ITC is still trading at 25.4x one-year forward EPS valuation by 24%. is valued at 21x FY24 EPS, implying a 65% premium to its global peer average. Given its strong mid-term visibility and the defensive nature of the business, especially in a volatile macro environment, we believe the environment, the premium multiple is reasonable,” Motilal Oswal’s report added. The brokerage maintained a buy rating on the stock and raised its target price to Rs 335 per share.