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    Buy ITC, target price Rs 320: Phillip Capital (India)

    Synopsis

    The brokerage believes ITC is better placed vs competition at least for next few quarters as 1) More than 80% of the company’s profits are largely protected vs FMCG peers, who are grappling with twin issues of lower volume growth and hyperinflation in RM index.

    ITCAgencies
    Phillip Capital (India) has buy call on ITC Ltd. with a target price of Rs 320.0. The current market price of ITC Ltd. is Rs 275.65.

    ITC Ltd., incorporated in the year 1910, is a Large Cap company (having a market cap of Rs 339690.55 Crore) operating in Tobacco sector.

    ITC Ltd. key Products/Revenue Segments include Packaged Food Item, Agricultural Products, Paper & Paper Boards, Others, Tobacco Unmanufactured, Service (Hotel), Printed Materials, Other Operating Revenue for the year ending 31-Mar-2021.

    Financials
    For the quarter ended 31-03-2022, the company has reported a Consolidated Total Income of Rs 18252.64 Crore, down -2.85 % from last quarter Total Income of Rs 18787.72 Crore and up 22.32 % from last year same quarter Total Income of Rs 14921.76 Crore. Company has reported net profit after tax of Rs 4259.68 Crore in latest quarter.

    Investment Rationale:
    The brokerage believes ITC is better placed vs competition at least for next few quarters as 1) More than 80% of the company’s profits are largely protected vs FMCG peers, who are grappling with twin issues of lower volume growth and hyperinflation in RM index. Notably, cigarette industry volume recovering before pre-Covid levels and ITC re-gaining lost market share from its peers acts as icing on the cake.

    2) Cyclical /Commodity business (Hotels, Paper and Agriculture) shall report strong nos. for next few quarters due to favourable base, global supply chain disruption and other macro challenges. Dividend yield of %5, potential corporate action (listing of IT business, right -sizing of Hotels business) and investor’s increased interest towards defensive stocks are likely to further support stock. Structural issues still persists (ESG concerns, long -term growth trajectory for cigarette business) ; however ITC is likely to be silver lining amongst dark clouds for next 9 months (till next Union budget, which is likely to be scheduled on 1st Feb, 2023)



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    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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