Big brokerage companies are crazy about ITC shares, target price up to Rs 540 with buy rating, current price Rs 440

ITC Stock Outlook :Flat trading is being seen in the shares of ITC, a large-cap company with diversified business. The stock is trading around its yesterday’s closing price of Rs 441 (ITC Stock Price). The company has released its results for the March quarter, which are mixed. However, experts and brokerage houses believe that FMCG performed better than peers in the challenging environment. Cigarette revenue was better than estimates with volume growth. After the results, most brokerage houses have advised investing in the stock (Buy ITC Stock) and have given the highest target of Rs 540.

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Brokerage House Rating and Target Price

Motilal Oswal

Rating: Buy
Target Price: Rs 515

JM Financial

Rating: Buy
Target Price: Rs 540

Antique Broking

Rating: Buy
Target Price: Rs 486

City

Rating: Buy
Target Price: Rs 515

Investec

Rating: Buy
Target Price: Rs 504

CLSA

Rating: Outperform
Target Price: Rs 470

Goldman Sachs

Rating: Buy
Target Price: Rs 480

Jefferies

Rating: Hold
Target Price: Rs 435

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What does the brokerage house have to say?

Brokerage House JM Financial has given a BUY rating on ITC shares and has a target price of Rs 540. The brokerage says that the company’s earnings have been broadly in line with expectations. Cigarette revenue was better than expected with volume growth. However, profitability remained weak due to higher input costs. Non-cigarette EBIT once again declined sharply due to large-scale deleverage plus cost and growth pressure in both agri and paperboard, affecting overall profitability.

FMCG continues to perform well in context of broad-based weakness in consumption. Sales growth trend is similar to 3Q and better than some key peers (except Nestle, TCPL, GCPL). Margins continue to improve but expansion is limited due to higher input costs. While the FMCG business is tracking well. Acceleration in cigarette volume/EBIT growth along with sharp capital allocation strategy will be key for rerating from current levels.

Brokerage House Antique Broking has given a BUY rating on ITC shares and has a target price of Rs 486. The brokerage says that the company’s 4QFY24 cigarette revenue performance was better than expectations. However, cigarette profitability was affected by high leaf tobacco prices. Apart from this, weakness in paperboard and agri business affected revenue growth. 2% cigarette volume growth on higher base (12% growth last year) was healthy. ITC is expected to maintain 3%-4% growth in cigarette volume due to focused portfolio / market intervention.

FMCG outperformed peers in a challenging environment. Hotels performed well with revenue/EBIT growth of 15%/34% due to higher ARR and occupancy and operating leverage. In our view, ITC has clearly outperformed its peers in the consumer categories, cigarettes and staples in a challenging environment.

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How were the results

ITC Limited’s profit declined marginally to Rs 5,190.71 crore (ITC Profit) in the fourth (January-March) quarter of the last financial year. The company had a profit of Rs 5242.59 crore in the same quarter a year ago. The company’s operating income grew 2 per cent to Rs 19,446.49 crore in the fourth quarter of FY 2023-24 from Rs 19,058.29 crore in the same quarter of 2022-23. The board of directors of the company has recommended a final dividend of Rs 7.50 per ordinary share of Rs 1 for the financial year 2023-24.