Sharekhan has raised its target on ITC Limited with a buy recommendation. The brokerage believes that the company’s core cigarette business and non-cigarette FMCG segment are on the path of stable revenue, while the paperboard, paper and packaging (PPP) business also has scope for improvement.
Sharekhan told
Sharekhan pointed out that post the divestment of ITC’s hotel business, the company’s return profile will improve in the coming years. “ITC’s discounted valuation, which is at 24x/22x FY26/27 EPS, makes it an excellent pick,” the brokerage said.
Currently, ITC shares are down by 0.66 percent.
Currently, ITC shares are trading down by 0.66 per cent at Rs 508.70. According to Sharekhan, there is a possibility of an increase of about 17 per cent from this target price. The brokerage expects another five per cent increase in cigarette prices in the near future.
ITC’s non-cigarette FMCG business
ITC’s non-cigarette FMCG business is growing at 10 per cent, and its EBITDA margins are also improving. Although the PPP business may see some pressure, demand is expected to improve ahead of the festive season.
ITC to see double-digit growth in earnings in the next two years
Sharekhan is confident that ITC will deliver double-digit growth in its earnings over the next two years and its share price is trading at a discount to peers, making it an attractive option for investors.