Analyst Corner: Retain ‘hold’ on ITC with TP of Rs 265

Even so, watch out for the Union Budget on February 1 for cigarette taxes.

Retain ‘HOLD’ with a TP of Rs 265.
Retain ‘HOLD’ with a TP of Rs 265.

Turning a new leaf: In a welcome step to improve transparency and disclosure levels, ITC will hold its first-ever analyst meet (a long-standing investor demand). We outline 13 questions that investors should ask ITC. In our view, this step by ITC to become more investor-friendly and catch up with best practices of peer set is welcome. ITC has been proactively taking feedback from investors over the past few years. We appreciate better disclosures in its quarterly reports. Even so, watch out for the Union Budget on February 1 for cigarette taxes. Overall, ESG-led investing is assuming significance and ITC is consciously striving to climb up the ESG ladder. Retain ‘HOLD’ with a TP of Rs 265.

ITC has been aggressive and proactive under CMD Sanjiv Puri. ITC recently acquired a 16% stake in D2C brand Mother Sparsh. Over the past few years, ITC has scaled up its FMCG acquisitions well (Savlon, Sunrise, Nimyle, B Naturals). Its FMCG business has tied up with Inox Leisure and McDonald’s, which shows its out-of-the-box thinking. ITC has been the most aggressive company in getting approval for PLI in Foods. It has increased the dividend payout and also put hotels on a low capex model via management contracts. The company has also forayed into the breakfast segment with ready-to-cook and ready-to-mix offerings. Overall, ESG-led investing is assuming significance, and ITC is consciously striving to climb up the ESG ladder. Watch out for Union Budget on February `and recommendations of the panel on tobacco tax, a key variable. Retain ‘HOLD/SN’ with a TP of Rs 265.

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