KR Choksey has given Buy recommendation for ITC with a target price of Rs. 400 in its research report issued on Oct 27, 2022

KR Choksey’s research report on ITC

For Q2FY23, ITC reported consolidated operating revenue of INR 1,86,080 mn (+25.4% YoY/ -6.2% QoQ). For H1FY23, ITC’s revenue increased by 32.2% YoY to INR 3,84,393 mn. ITC’s EBITDA for Q2FY23 was INR 62,591 mn (+24.7% YoY/ +3.0% QoQ). EBITDA margin for the quarter was at 33.6%, which declined by 16 bps YoY while improving by 299 bps QoQ. For H1FY23, EBITDA margin contracted by 44 bps YoY to 32.1%. In Q2FY23, PAT improved by 24.4% YoY and 5.2% QoQ to INR 46,198 mn. PAT margin for Q2FY23 was at 24.8% (-19 bps YoY/ +269 bps QoQ). For H1FY23, PAT increased by 28.9% YoY to INR 90,095 mn, while PAT margin declined by 60 bps YoY.


We value ITC shares using the SOTP approach applying 12.6x EV/EBITDA (unchanged) on the FY24E EBITDA of Cigarette business; 21.0x EV/EBITDA (previously 18.9x) on the FY24E EBITDA of Hotels business; 8.6x EV/EBITDA (unchanged) on FY24E EBITDA of Agri business; 6.0x EV/EBITDA (unchanged) on FY24E EBITDA of Paper business and 8.8x EV/Revenue (previously 8.0x) on FY24E Revenue of FMCG business – we increase our target price to INR 400 per share (previously INR 369); an upside of 15.5% over the CMP. Accordingly, we maintain our “BUY” rating on ITC Ltd shares.

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