Despite a 23% increase in Q4 earnings, ITC’s stock is down roughly 2% today. Is it better to purchase, sell, or keep ITC stock?

    ITC’s stock is down

     ITC's stock is down
     ITC’s stock is down

    ITC shares fell 1.83% to Rs 411.95 today on profit booking shortly after the cigarettes-to-hotels conglomerate reported a 23.4% year-on-year profit increase to Rs 5,175.48 crore for the quarter ended March 2023, compared to Rs 4,195.69 crore in the same quarter last year. The board of directors also proposed a final dividend of Rs 6.75 and a special dividend of Rs 2.75 per equity share with a face value of Re 1 for the fiscal year ending March 2023. ITC stock has risen 21% in the previous six months and more than 50% in the last year.

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    Stock Call: Should you purchase, sell, or keep your ITC stock?

    HDFC Securities: Buy – Target price of Rs 395 (down 4%).

    “ITC continues to outperform other FMCG peers; however, the current stock run-up (50% in LTM) limits potential further rerating.” We keep our projections and value ITC on a SoTP basis, resulting in a target price of Rs 395. The projected target P/E is 22x Mar-25E earnings per share. Maintain ADD,” HDFC Securities analysts stated.

    Nuvama: Buy with a target price of Rs 500 (up 21.3%).

    “We continue to be bullish on ITC’s FY24E revenue momentum, with all of its segments performing well.” Overall, we are increasing FY24E/25E EPS by 5.6%/2.6%. “Retain ‘BUY’ with a SoTP-based TP of Rs 500,” stated Nuvama Institutional Equities analysts.

    Motilal Oswal: Buy with a target price of Rs 485 (17.7% increase).

    “The key challenges for ITC in the past, including an extremely punitive tax regime, Covid-related disruption, and commodity cost inflation, now appear to be receding.” “We maintain a BUY rating with a target price of Rs 485,” said analysts at Motilal Oswal.

    Elara Securities: Accumulate with a target price of Rs 473 (up 14.8%).

    “We reiterate accumulate with a higher target of Rs 473 on SoTP, up from Rs 438, pricing the cigarettes business at 22x FY25E P/E and the FMCG business at 6x FY25E price/sales.” “ITC is better positioned in the short term, given the high dividend yield (4%) and a double-digit increase in cigarette volumes,” noted Elara Securities analysts.

    Kotak: Buy – Fair Value: Rs 450 (9.2% increase)

    “Given the stable tax regime and demand environment, ITC is on track to achieve DD revenue and EBIT growth in cigarettes in FY2024E.” “We roll over and revise the FV to Rs 450 (from Rs 430),” said Kotak Institutional Equities analysts.


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