Sharekhan has given Buy recommendation for ITC with a target price of Rs. 280 in its research report issued on Feb 03, 2022

Sharekhan’s research report on ITC

ITC’s Q3FY2022 cigarettes sales volume growth stood at 12-13% (net revenues grew by 12.6%); Cigarette EBIT margin (based on net sales) improved by 117 bps on y-o-y basis. Sales volume stood flat compared to pre-COVID levels. Non-cigarette FMCG business revenues grew 9% in Q3FY2022 on a high base (two-years CAGR stood at 11%). Agri-business revenues doubled to Rs. 4962.4 crore led by higher exports. Cigarette sales volumes are set to improve further as government has not hiked taxes on cigarettes for second consecutive year. Non-cigarette FMCG biz would grow in single digits while paperboard, paper & packaging business would clock strong double-digit growth in the near term.

Outlook

The company declared an interim dividend of Rs. 5.25 per share. Stock is trading at discounted valuations of 16.7x/15.0x its FY2023/24E EPS. We maintain a Buy recommendation on the stock with PT of Rs. 280.

 

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