Diversified conglomerate ITC Ltd. reports nearly 21% growth in net profit for the quarter ended September 2022 4,466 crore, helped by cigarettes, agriculture and its hotel businesses. The company said the pick-up in demand linked to the festive season helped offset inflationary constraints, which were weighed on consumption expenditure. Analysts expect ITC to be better positioned than its competition for at least the next few quarters and watch FMCG stock take a hit. 400 marks.
Brokerage Philippe Capital said ITC is positioned better than the competition as over 80% of the company’s profits are substantially protected compared to its FMCG counterparts, which are battling the twin issues of low volume growth and hyperinflation in the RM index. and regaining lost market share from its peers. Serves as icing on the cake.
“In our view, structural issues still persist (ESG concerns, long-term growth trajectory for the cigarette business); however, the ITC for the next few months (till the next Union Budget, which is likely to be scheduled on February 1, 2023) remains black. There is likely to be a silver lining between the clouds,” the note said. The brokerage has maintained its buy rating ITC share with a target price of 400 per.
“ITC continues to benefit in the cigarette market as the organized share rises. With a focus on digital adoption, customer centricity and agility, ITC is driving strong growth across sectors. Keeping this in mind, we are increasing our FY23E/FY24E EPS by 7.3%/4.3%,” said another brokerage Edelweiss with revised 12-month target price. 400 (before 357) while maintaining buy rating on the stock.
With an efficient taxation regime and healthy performance across sectors, domestic brokerage and research firm Axis Securities remains positive on the stock from a medium to long term outlook. While inflation remains a key monitorable, the brokerage expects some moderation going forward; A favorable monsoon and moderation in key RM prices should boost consumer demand. It has also maintained Buy with a revised target price of 400 per share.
The views and recommendations given above are those of individual analysts or broking companies and not of Mint.
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