Motilal Oswal has given Neutral recommendation for ITC with a target price of Rs. 265 in its research report issued on May 19, 2022

Motilal Oswal’s research report on ITC

ITC’s 4QFY22 EBITDA and PAT growth came in line with our estimates.  Cigarette volumes reportedly rebounded to the pre-Covid levels and grew 9% YoY (calculated) in 4QFY22, above our estimate of 4% YoY. In the ongoing environment where material cost inflation is a worry, ITC’s resilient Cigarette margins render relatively better near-term visibility v/s peers. Longer term re-rating though will depend on diversification from cigarettes (81% of FY22 EBIT) and whether sustained earnings growth returns to the late-teen levels seen in the first half of the last decade.

Outlook

We maintain our Neutral rating on the stock with a TP of INR265.

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