ITC share price at new 52-week high, jumps 3% on rise in Q1 net profit; should you buy, sell or hold?

ITC share price jumped nearly 3 per cent to a new 52-week high of Rs 316.65 apiece on BSE on Tuesday, after the company’s consolidated net profit rose 33.46 per cent on-year.

ITC share price at new 52-week high, jumps 3% on rise in Q1 net profit; should you buy, sell or hold?
In the last one year, ITC share price has soared more than 50 per cent, and 42.13 per cent so far this year. Image: Reuters

ITC share price jumped nearly 3 per cent to a new 52-week high of Rs 316.65 apiece on BSE on Tuesday, after the company’s consolidated net profit rose 33.46 per cent on-year to Rs 4,462.25 crore in April-June 2022. The company had posted a profit of Rs 3,343.44 crore during the corresponding quarter of previous year. ITC stock has surpassed its previous high of Rs 308.80 touched on Monday. Analysts see up to 15 per cent potential upside in the stock, with a target price at Rs 355 apiece. In the last one year, ITC share price has soared more than 50 per cent, and 42.13 per cent so far this year. The stock has rallied more than 34 per cent in the last six months, and 7 per cent in one month. Analysts noted that barring the Agri business, where the ban on wheat exports may result in relatively muted growth in subsequent quarters, momentum in other businesses is expected to remain robust.

Motilal Oswal Financial Services

BUY | Target price: Rs 355 | Upside: 15%

Analysts at Motilal Oswal Financial Services have turned constructive on the stock, led by a better than expected demand recovery and a healthy margin outlook in Cigarettes, robust sales momentum in the FMCG business, lower drag from the Hotels business, and better capital allocation in recent years. While valuations of global Tobacco peers have returned to pre-COVID levels (Jan’19), at 18.8x FY24 EPS, ITC still trades at a 26% discount to its Jan’19 valuations of 25.4x one-year forward EPS, they said. “We see scope for further upside, based on a healthy earnings outlook,” analysts said.

Nirmal Bang Institutional Equities

ACCUMULATE | Target price: Rs 340 | Upside: 10.6%

Analysts said that inflationary headwinds showed up in subdued consumption expenditure, with volume coming under pressure, particularly in rural markets. While some moderation is being seen in input prices, it remains a key monitorable for ITC, along with rural demand and restrictions on wheat exports. At the current market price, ITC now trades at ~22x/20x FY23E/FY24E EPS. “We downgrade ITC a notch below to Accumulate rating from Buy earlier, with a revised target price (TP) of Rs 340 (Rs 310 earlier), valuing it at a multiple of ~22x on March’24E EPS, as the upside is less than 15%,” they said.

ICICI Securities

ADD | Target price: Rs 350 | Upside: 13.8%

Analysts at ICICI Securities expect ITC stock to benefit from expectation of Value (on current FCF profile basis) to outperform Growth/Expensive basket, potential price hikes in cigarettes in the current inflationary environment (better consumer acceptance likely), good underlying performance in the FMCG business, and  improving outlook (cyclical upturn) for the hotels business. ICICI Securities noted that key downside risk includes tax hikes much ahead of inflation leading to volume pressure (on cigarettes) as price elasticity is still unfavourable.

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