Motilal Oswal has given Neutral recommendation for ITC with a target price of Rs. 220 in its research report issued on Jun 02, 2021

Motilal Oswal’s research report on ITC

While a better than expected performance in the Agri business led to a beat on sales, EBITDA and PBT were in line with our estimates. Volume and sales growth in Cigarettes, sales growth in FMCG – Others, as well as a full year dividend payout were broadly in line with our expectations. Unlike other discretionary categories, which have reported a strong rebound, two-year average growth in Cigarette volumes as well as EBIT declined by ~2% each in 4QFY21.

Outlook

While the impact of lockdowns in 1QFY22 may not be as severe as that in 1QFY21, there will be a further sequential impact compared to 4QFY21. Uncertainly on Cigarette EBIT growth, which has been below 10% for 25 of the last 27 quarters, persists. Maintain Neutral.