ITC’s share price fell over 2% in intra-day trade on Friday on concerns about earnings moderating going forward. For Q2, the company reported a 6.11% growth in consolidated net profit to Rs 4,955.90 crore Vs Rs 4,670.32 in Q2FY23. The company’s revenue from operations in the Q2FY24 rose 3.55% to Rs 19,270.02 crore, compared to Rs 18,608 crore last year. The share price of ITC fell 1.23% in the last five days, 2.32% in the last one month, while it gained 10.50% in the last six months and 32.88% year-to-date.
Should you buy, sell or hold ITC shares?
Jefferies: Buy – Target Price: Rs 530
“After nine quarters of DD growth, 2Q was the first quarter of MSD Ebitda growth. Cigarette volume growth also moderated to a multi-quarter low (4% YoY), although appears impressive in the context of a similar or even lower level for FMCG peers. The overall earning miss was entirely due to paperboards, which should get better ahead. While earning growth should moderate ahead, valuation at 25x P/E appears palatable in a sector which enjoys excessive premium – ‘Buy’. We cut our EPS estimates by 1-2% to reflect the 2Q miss. Roll-over to Sep-25 and retain ‘Buy’ rating with an unchanged Target Price of Rs 530.”
Motilal Oswal Financial Services: Buy – Target Price: Rs 535
“ITC’s 2QFY24 results were in line with our estimates. At a time when uncertainty looms over the industry, led by high inflation and continued weak rural sales, ITC’s recovery in Cigarette volumes offers decent earnings visibility at reasonable valuations and attractive dividend yield. We maintain our ‘Buy’ rating with a Target Price of Rs 535, based on 28x FY25E EPS.”
HDFC Securities: Add – Target Price: 450
“ITC’s overall revenue/EBITDA was up by 3% YoY each, and most segments’ favourable base was behind. The recent stock run-up (30% in LTM) and limited earnings surprise scope given higher base limit further rerating potential. We maintain our estimates and value ITC on a SoTP basis to derive a Target Price of Rs 450. The implied target P/E is 24x Sep-25E EPS. Maintain ‘Add’.”
(The recommendations in this story are by the respective research analysts and brokerage firms. FinancialExpress.com does not bear any responsibility for their investment advice. Capital markets investments are subject to rules and regulations. Please consult your investment advisor before investing.)
