ITC share price is under pressure after the company reported its December quarter earnings. The FMCG-to-cigarettes giant posted mixed results, with its core cigarette business performing well, but other segments, including FMCG and paperboards, facing challenges. Adding to the buzz, ITC announced a 100% acquisition of frozen food player Prasuma in tranches over the next three years.
Let’s take a look at what the brokerages say about ITC stock:
Nuvama on ITC: Cigarette business outperforms, but FMCG and paperboards struggle
The brokerage firm, Nuvama maintains a ‘Buy’ rating with a SoTP-based target price of Rs 571. According to them, ITC’s Q3FY25 results is in line with expectations. The company’s revenue and EBITDA grew by 8.3% and 1.6% YoY, respectively, while adjusted profit after tax fell 9.7% YoY.
The cigarette segment stood out, with net revenue and volumes rising 8.1% and 6% YoY, surpassing estimates. However, the FMCG and paperboards, paper & packaging divisions faced profitability pressures, dragged down by rising raw material costs.
ALSO READITC to acquire 100% stake in Prasuma over 3 years
“Profitability (EBIT) for FMCG – Others (down 26.6% YoY) and Paperboards, paper & packaging (down 30.6% YoY) was weak as we highlighted. Key RM inflation led to EBITDA margins compressing 239bp YoY to 34.2%,” said Nuvama in its note.
Motilal Oswal cuts EPS Estimate for ITC
Motilal Oswal has cut its EPS estimates for ITC by 4% for FY25 and 5% for FY26, mainly due to the demerger of the hotel business w.e.f. Jan’25. According to them, ITC’s core business of cigarettes has shown steady performance. With stable taxes on cigarettes, they anticipate sustainable growth in this business.
“While the FMCG sector is seeing moderation due to the rising commodity prices, ITC is enjoying industry-leading growth over peers due to its category presence (large unorganized mix, under-penetrated, etc.),” they added.
As a result Motilal Oswal reiterates ‘Buy’ rating on ITC with SOTP-based target price of Rs 550.
Morgan Stanley maintains Overweight on ITC
The brokerage firm,Morgan Stanley has maintained an Overweight rating on ITC, setting a target price of Rs 578 per share.
JP Morgan retains Overweight on ITC
JP Morgan also retained an Overweight rating on the stock, with a target price of Rs 505 per share.
» Read More
