ITC shares jump after Morgan Stanley raises target stock price

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Published: September 27, 2019 11:43:47 AM

Shares of FMCG major ITC jumped on Friday morning, after global firm Mogan Stanley raised its target stock price.

The valuation of ITC climbed Rs 11,917.17 crore to Rs 3,01,657.76 crore.ITC shares gained more than 3.2% to hit the day’s high at Rs 258.10 on BSE.

Shares of FMCG major ITC jumped on Friday morning, after global firm Mogan Stanley raised its target stock price. ITC shares gained more than 3.2% to hit the day’s high at Rs 258.10 on BSE. Morgan Stanley noted that ITC is one of the biggest beneficiaries of the corporate tax cuts announced by Narendra Modi-led government last week. The global firm noted that increased pricing flexibility will strengthen long-term growth prospects. With the 4% sustainable dividend yield, the risk-reward is compelling.

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Track live stock price: ITC

Morgan Stanley noted that it does not expect Morgan Stanley to raise prices of cigarette portfolio in FY20. The research firm expects ITC to deliver 19% FY20 earnings growth. Morgan Stanley estimates that the cigarette growth of 3% and 5% respectively. The firm expects FY19-22 Revenue, EBIT and PAT CAGR of 10%, 10% and 14% respectively. The firm has an overweight rating on the stock with a target price of Rs 370.

In the latest quarter, ITC has reported a robust 12.6% on-year rise in its standalone net profit to Rs 3,173.94 crore with its gross revenue soaring 6% on-year during the period. The diversified conglomerate had posted a net profit of Rs 2,818.68 crore in the corresponding quarter in the previous fiscal.

The firm’s gross revenue from sale of products and services rose to Rs 11,361.35 crore for the June quarter this fiscal compared with Rs 10,722.22 crore for the corresponding period last fiscal, according to the firm’s stock exchange filing. On a sequential basis, however, both net profit and gross revenue in the April-June period saw 8.84% and 5.82% quarter-to-quarter (q-o-q) decline from Rs 3,481.90 crore and Rs 12,064.15 crore, respectively, in the January-March period. The hotel segment revenue during the quarter rose 15% on-year to Rs 392.59 crore. The firm’s operating profit stood at Rs 10.39 crore. The company said while the segment EBITDA posted a strong growth of 18%, additional depreciation charge pertaining to the new properties weighed on segment results.

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