ITC on Monday reported a nearly 18% year-on-year (YoY) rise in net profit for the quarter ended June 2023 to Rs 4,903 crore. Revenue from operations, net of excise duty, declined 8.5% YoY to Rs 15,828.20 crore. The net profit was higher than an ETNow poll of Rs 4,769 crore, but revenue was lower than the estimated Rs 16,893 crore. Operating profit, calculated as earnings before interest, taxes, depreciation, and amortisation (EBITDA), rose 10% YoY to Rs 5,083 crore in the quarter. Operating margin expanded sharply by 541 basis points to 32.11%.
ITC shares gained 1.5% to hit the day’s high of Rs 456 on the NSE and were top gainers in the Nifty pack despite a negative trade by the frontline indices Nifty50 and BSE Sensex which were down 0.5% in the opening trade.
Here is what the top brokerages recommended:
Morgan Stanley: Overweight | Target: Rs 493
Morgan Stanley remains ‘Overweight’ on ITC stock and recommends a price target of Rs 493 which is up from its previous target of Rs 474. The estimated upside is 10%. The US-based investment bank and financial services company dubbed ITC’s Q1FY24 earnings as yet another good show which beat the brokerage’s estimates. It said that the earnings augur well for continued stock outperformance while noting that all business segments performed better than expected on EBIT growth. The indicative timeline for listing ITC hotels is 15 months which is around November 2024, it said.
Motilal Oswal: Buy | Target: 535
Motilal Oswal recommends a buy on ITC for a price target of Rs 535, estimating a 19% upside on the Monday closing price. The brokerage believes ITC’s earnings visibility remains better than peers. “At a time when uncertainty looms over the industry, led by high inflation, unpredictable monsoons and continued weak rural sales, ITC’s recovery in cigarette volumes offer decent earnings visibility at reasonable valuations and attractive dividend yield,” Motilal Oswal said in a note. Its fair value is based on 28X FY25E EPS.ITC reported healthy cigarette volume growth of 8% in 1QFY24 which was in line with Motilal Oswal’s estimates while sales disappointed it.
Nuvama: Buy | Target: Rs 560
Nuvama remains positive on ITC’s FY24E revenue momentum with major segments doing well as it retains a buy view on ITC based on SoTP target price of Rs 560. The view is for the next 12 months. ITC’s Q1FY24 revenue came below its forecast and was also lower than the consensus estimates, the brokerage said in a note. Though EBITDA was in line while PAT beat its estimate. The demerger of its hotel business will unlock value for existing ITC shareholders, the brokerage opined. The upside seen is 25%.
Nirmal Bang: Buy | Target: Rs 520
Nirmal Bang has recommended a buy on the counter for a price target of Rs 520 which is a 15% upside from the previous closing price. The Q1 sales were in-line with NB’s estimates with margins surprising the brokerage, positively. The forecasts do not build in demerger and eventual listing of the hotels business as it awaits regulatory approvals and further clarity.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
