03 Sep , 2022 By : Kanchan Joshi
Bulls charged on ITC shares despite lacklustre sentiment in the overall market on Friday. The FMCG giant's shares have clocked a fresh 52-week high and traded near the level. Riding on a strong buying spree, ITC has crossed a market valuation of ?4 trillion after 5 years. In a year, ITC shares have skyrocketed by nearly 55%. There is room for more upsurge in ITC shares as many analysts have given a buy rating on the company.
At around 3.07 pm, ITC shares traded at ?322.70 apiece up by 1.62%. The shares were near the fresh 52-week high of ?324.20 apiece - resulting in a more than 2% jump in the day.
At the current market price level, the company's valuation is around ?4,00,104.45 crore. The last time ITC held over ?4 trillion market cap was in July 2017.
Taking into consideration the new 1-year high, ITC shares have climbed nearly 19% in three months, while its gain has been nearly 48% in six months. In a year, ITC shares advanced nearly 55%.
In Q1FY23, ITC posted a 33.97% growth in consolidated net profit to ?4,389.76 crore compared to ?3,276.48 crore in the year-ago period. Consolidated revenue stood at ?19,831.27 crore higher by 39% from ?14,240.76 crore in Q1FY22.
During the quarter, cigarette revenues were up 29% yoy to ?6,608 crore. While the revenue in the FMCG business stood at ?4,451 crore as compared to ?3,725 crore, up 19.5% yoy. Hotels revenue came in at ?554 crore up 332.8% yoy. The revenue from the paper segment was at ?2,267 crore higher than 43.2% yoy.
Last month, ITC exited its lifestyle retailing business. The decision was made after a strategic review of its business portfolio.
Should you invest in ITC shares?
In India Inc's Q1FY23 post-earnings review report, KR Choksey lead analyst Vikrant Kashyap said, "ITC had a strong quarter with revenue of ?1,98,313 million ( 39.3% YoY/ 11.7% QoQ/ 16.0% vs. our estimate). ITC delivered strong growth across segments."
On segment-wise, Kashyap said in the note, "Cigarettes growth ( 28.6% YoY) was supported by stable taxation and subsequent gain of business from illicit trade. FMCG- Others growth ( 19.5% YoY) was driven by Out-of-home categories including Snacks, Beverages, Confectionery, Frozen Snacks, Fragrances, and Agarbattis, while staples were resilient. Hotels grew on a low base ( 334.4% YoY) driven by ARR and occupancy being ahead of pre-pandemic levels. Agri growth ( 82.3% YoY) was led by wheat, rice, and leaf tobacco exports. Paperboards, paper and packaging growth ( 43.3% YoY) was due to strong demand across end-user segments and exports."
Going forward, Kashyap's note said, "Agri business continues to provide strategic sourcing support for the Branded packaged goods business," adding, "green shoots are visible in the Cigarettes business while increased economic activity is benefitting consumption growth in FMCG, and packaging businesses."
KR Choksey analyst has set a 'Buy' rating with a new target price of ?369 apiece compared to the earlier target of ?325 apiece.
Analyst at Geojit in a report said, "ITC delivered a strong operational and financial performance across business segments despite the ongoing challenges, including high inflation. We expect a good festival season ahead which will lead to a pick-up in consumption expenditure. We also expect leisure, FMCG, PPP, and agri-businesses to deliver strong performance by leveraging strong customer relationships. ITC continues to focus on investment in cutting-edge technology by accelerating digital presence. With a promising outlook and trust in the stock’s resilience in the current market volatility, we reiterate our BUY rating with rolled forward TP of Rs. 352 using SOTP valuation."