Business

ITC hits 52-week high after better Q1 earnings: What should you do with the stock now?

ITC shares rose almost 2 percent to touch the highest 52 weeks RS 314.05 in early trading on August 2, the day after the company reported a better figure for the quarter ended June 2022.

The ITC diversification conglomerate on August 1 said its net profit consolidated for the quarter (Q1fy23) came at RS 4,462.25 Crore, up 33.46 percent, compared to RS 3,343.44 Crore which was registered a year ago.

The amount above is estimated as a CNBC TV18 Analyst’s opinion in projecting RS 4,050 CRORE.

Revenue from the operation was established in RS 19,831.27 Crore, up 39.25 percent from RS 14,240.76 Crore recorded in the same quarter last year.

The company said the cigarette business revenue jumped 28.63 percent to RS 7,464.10 Crore years-to-year (yoy), while the non-smoking business contributed RS 4,458.71 Crore, up 19.49 percent yoy, to the topline.

This is what the broker said about stocks and the June quarter post company

Morgan Stanley

Foreign research companies have maintained ‘overweight’ ratings on stocks and raised the target price to RS 330 per share.

Top-line and Ebitda are in front of estimates led by strong growth in paper, agricultural business … However, the performance of cigarettes is in line with expectations.

Strong results and a positive short-term revenue driver augur well for stocks, report CNBC-TV18.

CLSA

CLSA House Brokerage has maintained a ‘outperformed’ ranking on stock and raised the target price to RS 330 per share.

Mobility recovery helps strong recovery in income and margin, while the cigarette business registered a 25 percent volume growth with a stable margin at 74 percent.

Other FMCG held a healthy growth and a stable margin, while the non-FMCG stage was sharp, CLSA said.

CLSA options are preferred and increase the estimated FY23-24 income by 8% to capture recovery, report CNBC-TV18.

Motilal Oswal

We have changed constructively in stock, led by: (a) Recovery of requests that are better than estimates and healthy margin views in cigarettes, (b) strong sales momentum in the FMCG business, (c) lower obstacles than the hotel business business business hotels, and (d) better capital allocation in recent years.

While the assessment of global tobacco colleagues has returned to the pre-covid level (Jan’19), at 18.8x FY24 EPS, ITC is still traded with a 26 percent discount for January 2019 assessment of 25.4x EPS EPS striker one year.

We maintain 21X EPS multiple assigned previously, 65 percent premium for the average global colleague, and advanced to income in June 2024. Stocks have succeeded well, with a profit of 17 percent since our improvement to buy in June 2022. We see the scope for Reverse further, based on the prospects of healthy income. We maintain our ‘buy’ ranking.

Sharekhan

Without price increases in the near future and government actions to curb illegal cigarettes will help ITC to maintain the momentum of volume growth in the cigarette business.

Strong growth in the non-smoking FMCG business, recovery in the hotel business and strong growth in the PPP business will encourage two-digit income and PAT growth for the next two years.

Strong income visibility by increasing the prospects for the growth of the core cigarette business and margin expansion in the Non-Rickening FMCG business, along with the ability of high cash generations and strong dividend payments will reduce the assessment gap in the coming years. We maintain purchases on shares with a target price of RS 350 revision.

At 9:18 am, ITC quoted RS 312,85, riding Rs 5.30, or 1.72 percent in BSE.