Shares of a large-cap company were in the green after it reported better-than-expected results for the June quarter. At 12:38 AM, its shares were trading at ₹ 450.50 apiece on the National Stock Exchange (NSE).
ITC’s key segments performed well, however, the results for agri and paperboard segments were subdued. The stock took a breather after the recent rally.
On a consolidated basis, ITC reported a 16 percent increase in its net profit to ₹ 5180.12 crores in the April to June quarter of 2023 (Q1FY23), compared to ₹ 4462.25 crores in the corresponding quarter last year. Its revenue declined 6 percent and stood at ₹ 18,508.23 crores in the latest quarter, compared to ₹ 19,695.12 crores in the latest quarter.
JM Financial has a ‘buy’ rating on the shares of ITC with a target price of ₹ 555.00. This translates to an upside of 23.20 percent as compared to its share price of ₹ 450.50 apiece.
The brokerage sees a potential re-rating on the cards, due to a sharper capital allocation strategy. It said that the company’s FMCG segment continued to perform extremely well with margin improvement. JM Financial said that ITC’s cigarette business did fine and is moving in the right direction, but steady-state volume momentum has waned a tad, as per its workings. It added that the company’s hotels and paperboards business were other areas of disappointment.
ITC is the largest cigarette manufacturer and seller in India with operations in five business segments — FMCG cigarettes, FMCG others, hotels, paperboards, paper and packaging, and agri-business.
With a market capitalization of ₹ 5,61,948 crores, ITC is a small-cap company. It has a high return on capital employed (ROCE) of 39.20 percent and a high return on equity of 29.16 percent. The company has an ideal debt-to-equity ratio of 0.00 and a good dividend yield of 2.84 percent. Its shares were trading at a price-to-earnings ratio (P/E) of 28.08
As per ITC’s shareholding pattern, foreign institutions hold a 43.62 percent stake in it, followed by domestic institutions with 28.28 percent, retail investors with 18.93 percent and mutual funds with 9.17 percent.
ITC’s shares witnessed a massive rally of 130 percent from Feb 2022 to July 2023, delivering multibagger returns. Since then, its share price has corrected by nearly 8 percent. If we consider data for the last one year, ITC’s share price has gained 45 percent. ITC’s share price is currently 9.85 percent away from its 52-week high of ₹ 499.70 and 46.01 percent away from its 52-week low of ₹ 308.55.
Written by Simran Bafna
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