Over the past one month, the senior management of ITC has sold stock worth Rs.190 crore in separate transactions. This include 15,000 shares at Rs. 250 each sold by chairman YC Deveshwar. As YCD’s current sale is worth only Rs.37 lakh, the selling seems pretty well spread among the rank and file.

Earlier this September, the stock hit a high of Rs.266 led by optimism over good monsoon and the 7th Pay Commission. This was expected to spur a consumption recovery in rural and urban markets. That apart, its Q2FY17 results raised analysts’ expectations. Its cigarette business, which accounts for 50% of its turnover, has seen a recovery in the recent quarters.

In Q2FY17, cigarette volume grew 3% as against negative 12% last year. Also, its non-cigarette FMCG business, which accounts for 20% of total revenue, saw a 13.3% year-on-year growth in revenue. Hotels, which accounts for over 2% of the overall revenue also reported a profit of Rs.70 lakh compared to a loss of Rs.5.5 crore in the corresponding quarter last year.

ITC has always been a favorite among the investor community. 80% of the analysts tracking the stock have a ‘buy’ rating and hence the stock trades at 34x trailing earnings and 23x its estimated FY18 earnings. Analysts remain upbeat about growth after the clarity on taxation for tobacco products under the new GST regime, which is expected to be at existing rates (28% and additional cess).

While ITC was earlier expected to grow its topline at 10-12% over FY16-18, there is now concern over the impact of demonetization on the non-cigarette revenue. Reflecting investor worry, the stock has already corrected more than 11% post the announcement. At the current price of Rs.225, the stock offers a dividend yield of close to 2.5%.