Buy ITC, target price Rs 310: ICICI Direct

ICICI Direct has buy call on with a target price of Rs 310.0. The current market price of ITC is Rs 271.3 Time period given by analyst is year when ITC price can reach defined target.

ITC, incorporated in the year 1910, is a Large Cap company (having a market cap of Rs 328784.47 crore) operating in Tobacco sector.

ITC 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
ITC’s share price has underperformed the FMCG index with negative 6.8% return (from Rs 286 in May 2017 to Rs 267 in May 2022). The brokerage expects cigarette volumes, price growth in FMCG business & strong agri exports to drive revenues for the company in future. It has upgraded rating from HOLD to BUY for ITC. Stable taxation on cigarettes is expected to drive volumes, going forward. Moreover, the company has been gaining market share in cigarettes from last one year through new premium products & aggrieve trade promotions. FMCG business growing at a sustained pace with continuous improvement in margins in last five years. Opportunity size of existing foods portfolio is large. Given agri commodities constitutes larger part of raw material, input cost pressures is relatively less for the company. The company is utilising export opportunity in wheat, rice & tobacco in last one year. Recent spurt in global agri prices is likely to aid growth, the brokerage said.