ITC Share Price Holds Steady Ahead of Q3 Results; Analysts Weigh In on Buy, Sell, or Hold

ITC’s share price opened at ₹456.00 apiece, maintaining a flat trajectory compared to its previous close of ₹455.45 on the BSE.

Over the past three months, ITC shares have witnessed a modest 5% gain, while the stock has shown substantial growth of over 34% in the last year.

Analysts anticipate that ITC, a conglomerate spanning cigarettes to hotels, is well-positioned to benefit from consistent volume growth in both its cigarette and non-cigarette FMCG business in the December quarter. Additionally, a robust performance in the hotels segment during the festive season is expected to contribute positively to the company’s earnings.

According to Parth Shah, Research Analyst at StoxBox, ITC’s diverse product basket, with a higher share of food and beverages, is likely to help mitigate weak rural demand for FMCG amid erratic monsoons and high inflation.

Shah commented, “We expect ITC’s cigarettes segment to continue to record healthy revenue growth of around 15-20% and stable margins, aided by the relatively stable tax regime. Despite headwinds in the form of commodity cost inflation, we believe ITC’s profitability to remain intact in Q3FY24.”

Estimates from various brokerage firms suggest that ITC is expected to report a net profit of ₹5,183 crore for the quarter ending December 2023, reflecting a 3% growth from the corresponding quarter in the previous fiscal year. Revenue for Q3FY24 is anticipated to grow over 8% year-on-year to ₹17,425 crore.

At the operational level, EBITDA is projected to rise 4% YoY to ₹6,482 crore, with an expected expansion in EBITDA margin by 36 basis points to 39.1%, driven by an improved sales mix and the benefits of integrated manufacturing facilities.

Cigarette volumes are expected to expand by 3%, influenced by a high base and the impact of a cyclone in strategic markets in South India.

Key brokerage firm recommendations for ITC include an ‘Accumulate’ rating with a target price of ₹487 per share from Prabhudas Lilladher, and a ‘Buy’ call from Motilal Oswal Financial Services with a target price of ₹535 apiece.

At 9:20 am, ITC shares were trading 0.65% lower at ₹452.50 apiece on the BSE. Investors are advised to consider these insights while evaluating whether to buy, sell, or hold ITC shares.