Sharekhan has given Buy recommendation for ITC with a target price of Rs. 280 in its research report issued on Dec 14, 2021
Sharekhan’s research report on ITC
ITC eyes double-digit revenue growth and higher PAT growth in the medium term with sustained margin expansion riding on six core growth strategies of leveraging on institutional strengths, innovation, digitalisation, cost optimisation, sustainability and creating a strong talent base. Capex of Rs. 10,000 crore has been lined up over three years of which 35-40% will be ploughed into the FMCG business. Hotel business would stay asset-light and ITC would raise investments on digitalisation and inorganic initiatives in medium term. Management is committed to restructure hotel business after an overall recovery while it will evaluate unlocking value in the infotech and FMCG business once it attains scale. However there is not stated timeline for same.
With strong cash flow generation, ITC’s dividend payout would stay at 80-85%. Stock continues to trade at a discounted valuation of 16.3x/14.6x its FY2023/24E EPS. We maintain our Buy on the stock with an unchanged price target of Rs. 280.