ITC Limited hit a new All-Time High on Monday after its shares zoomed by more than 1 percent and reached Rs 388.20 in the early hours. The scrip gained after the company reported higher sales and earnings in the third quarter of FY23.
Their total revenue stood at Rs 19,616.08 Crore, up 4 percent Year on Year from Rs 18,787.72 Crore. The Company sustained its strong growth momentum across all operating segments during the quarter driven by a focus on accelerated digital adoption, customer centricity, execution excellence, and agility.
The net profit of the company stood at Rs 5,070.09 Crore which is an increase of 23 percent Year on Year from Rs 4,118.80 Crore. ITC’s Paperboards, Paper & Packaging saw a growth of 35.2 percent followed by Agri-Business and FMCG segments recording 32.6 percent and 18.5 percent respectively.
In addition to this, the multinational company has announced an interim dividend. The company will pay a dividend of 600% of its face value of Re 1 amounting to Rs 6 per share. For this purpose, the record date has been set as February 15th, 2023.
Based on the recent developments, brokerage firm Nomura is bullish on the stock and has a ‘Buy’ tag with a target price of Rs 455 per share representing an upside of 18% from the current levels.
We expect the strong business growth momentum to continue across divisions. In cigarettes, we believe a pragmatic tax regime not only acts as fodder for volume growth from illicit but also increases its predictability premium. We expect FMCG, hotels, and paperboard to continue to witness improvement in business and margins supported by new launches, and reach expansion, the brokerage said.
Further, global brokerage firm Jefferies is also bullish and has a ‘Buy’ rating with a target price of Rs 450 per share, an upside of 17% from the current price.
We use the SOTP methodology to value the ITC cigarette business at 23x Dec-24 earnings, new FMCG at 4.5x Dec-24 sales, agri and paperboard businesses at 15x Dec-24 EPS, and hotels at 1x Dec-24 invested capital to arrive at Target, said the brokerage.
Written by Anoushka Roy
