Sharekhan has maintained its Buy call on this diversified FMCG Giant with an Upside of 24 percent from current levels, citing several positive outlooks. The shares of ITC are currently trading at 420 levels, and the broker has given a target price of Rs. 522. Additionally, in past past 1 year the stock has given a return of -1 percent and the past 5-year return stands at 113 percent.
Target & Rational
Sharekhan has issued a Buy recommendation on ITC Ltd. with a target price of Rs. 522, indicating a potential upside of 24 percent from the current market price of Rs. 420. The positive outlook is driven by several key factors. Firstly, cigarette volume growth is expected to sustain, supported by the absence of any new tax hikes, which bodes well for ITC’s core business. Secondly, the company is actively working to revive and strengthen its non-cigarette FMCG segment, aiming to unlock further growth and margin improvement.
Additionally, the proposed demerger of the hotel business is expected to enhance ITC’s return profile by allowing sharper business focus and better capital allocation. On the valuation front, the stock is currently trading at a discount, with a P/E of 24x FY26E EPS and 22x FY27E EPS, making it attractive relative to its growth potential.
Key risks mentioned by the broker are potential increases in cigarette taxes, a slower-than-expected recovery in consumer demand, or continued volatility in raw material prices could negatively impact ITC’s performance and pose risks to the current earnings estimates.
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The company reported a 10.13 percent YoY increase in revenue from Rs. 17,038 Crore in Q4FY24 to Rs. 18,765 Crore in Q4FY25. On a QoQ basis, the company reported a decrease of 0.13 percent in revenue from Rs. 18,790 Crore in the previous quarter.
Their Net profit saw an increase of 281.58 percent YoY from Rs. 5,191 Crore to Rs. 19,808 Crore for the same period. On a QoQ basis, the company reported an impressive increase of 295.13 percent in Net profit from Rs. 5,013 Crore in the previous quarter.
In Q4FY25, EBIT Margin for Cigarettes stood at 71.50 percent, Paperboard, Paper, and Packaging stood at 9.20 percent, Agri stood at 7.0 percent, and FMCG others stood at 6.30 percent. The total margin for the quarter was 32 percent.
Headquartered in Kolkata, & originally established in 1910 as the Imperial Tobacco Company of India. ITC Limited is one of India’s largest and most diversified conglomerates. ITC has transformed into a multi-business enterprise with a strong presence across several key sectors. Its core business remains cigarettes and tobacco, where it is the market leader in India. However, over the years, ITC has significantly diversified into fast-moving consumer goods (FMCG), hotels, paperboards and packaging, and agriculture.
In the FMCG segment, ITC owns popular brands such as Aashirvaad, Sunfeast, Bingo!, Yippee!, and Fiama, and continues to invest in expanding its non-cigarette portfolio. In agriculture, the company operates one of India’s largest agri-supply chains, dealing in crops like wheat, rice, and leaf tobacco.
Written By Abhishek Das
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