Shares of ITC rose to highest in 3 years in Thursday’s opening deals after the FMCG major posted 12% growth in net profit to ₹4,195 crore for the January-March period, compared with ₹3,755 crore a year ago. The Kolkata-based company’s revenue from operations rose 15% to ₹17,754 crore as against ₹15,404 crore in the last year period.
FMCG revenue grew 12.3% during the quarter to ₹4,141.9 crore, while cigarette revenue rose 10% to ₹6,443. The hotels business reported segment revenue of ₹389.6 crore during the quarter, up 35.3% from a year earlier.
Analysts at JPMorgan have upgraded ITC shares to overweight with a March 2023 price target of ₹305. “In our view ITC offers a good combination of earnings visibility for FY23, strong cash flows and high dividend yield. We believe the stock should do well in current volatile markets as a good defensive play with undemanding valuations,” the note stated.
“We largely retain our FY23/24e EPS estimates. While FMCG peers combat growth slowdown and RM pressures, ITC is seeing a recovery in earnings, with good momentum across verticals and high margin visibility. Higher dividend payout and lower capex are also encouraging,” said Jefferies. It has retained Buy rating on ITC shares with price target of ₹305.
Paperboards, paper and packaging revenue stood at ₹2,182.7 crore in the fourth quarter as against ₹1,655.9 crore in the same period last year, the company said adding re-opening of educational institutions aided recovery but it was still below pre-pandemic levels.
“As the cigarette business has started re-gaining market share from illicit trades, we believe that the margins would improve in the business. Hence, we have raised our target price to ₹293 (SOTP valuation) and upgraded the stock to Accumulate,” said brokerage Dolat Capital.
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