ITC shares jump over 1% after Q2 earnings. Here’s what analysts say

Synopsis

Shares of FMCG major ITC surged 4% to a day's high of Rs 490 on the BSE on Friday, following the company's announcement of a nearly 16% increase in revenue to Rs 22,282 crore for the quarter ended September 2024. While net profit rose marginally to Rs 4,993 crore—up 2%—it fell short of Street estimates of Rs 5,079 crore. However, revenue exceeded expectations of Rs 18,068 crore.

Shares of FMCG major ITC jumped 4% to a day's high of Rs 490 on the BSE on Friday after the company reported a nearly 16% increase in revenue to Rs 22,282 crore for the quarter ended September 2024.

Net profit rose marginally to Rs 4,993 crore, marking a 2% increase.

The profit was slightly below Street estimates of Rs 5,079 crore, while revenues beat the expectations of Rs 18,068 crore.

The company's board approved the acquisition of 1.52 crore shares of EIH Ltd and 34.6 lakh shares of HLV Ltd from Russell Credit, a wholly-owned subsidiary of the company. This is being done to consolidate the shareholding of EIH and HLV under the company.

Post the Q2 results, here is what brokerages say:

Goldman Sachs: Buy | Target price: Rs 525

Goldman Sachs has maintained a buy rating on ITC while hiking the target price to Rs 525 from Rs 515

Q2 was a steady quarter in a tough consumption environment with good growth in the cigarette business, however, FMCG business margins were under some pressure from rising input costs. The agri business had a strong quarter, paper further weakens while hotels remain healthy.

Nuvama: Buy| Target price: Rs 585

Nuvama retained its buy view on ITC with a revised target price of Rs 585 against Rs 580 previously

ITC’s Q2FY25 revenue (up 16.8% YoY) beat the estimates driven by the Agri business. However, EBITDA and PAT came in line with the estimates. Factoring in strong growth in leaf tobacco exports and the value-added agri portfolio in H1FY25, Nuvama has increased FY25E/26E/27E EPS by 2%, 2.7% and 3.2% respectively.

HDFC Securities: Reduce| Target price: Rs 420

HDFC Securities maintained its reduce rating on the stock while hiking the target price to Rs 420 from an earlier Rs 405

The rating is maintained due to , as consensus cigarette volume growth assumptions (3-4%) for ITC's business over FY25-27 are at significant risk due to several factors. Moreover, HDFC Securities believes that the best margin expansion in ITC's FMCG business (from 7% in FY20 to 11% in FY24) is behind us, with future margin gains expected to be more gradual.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

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