ITC shares hit new record on earnings optimism; here’s what analysts expect

Shares of ITC touched a new all-time high in intraday trade on Tuesday on the back of continued gain in the last four sessions amid expectations of better earnings in the fourth quarter ended March 31, 2022. The share price of the cigarette-to-hotel conglomerate hit a new record high of ₹396 during the session, breaching the previous high of ₹394 made on February 23.

Extending its gaining streak for the fourth straight session, ITC shares opened marginally higher at ₹389.90 against the previous closing price of ₹388.70 on the BSE. The FMCG major surged as much as 1.9% to hit a new high of ₹396 in intraday trade, while the market capitalisation rose to ₹4.92 lakh crore. The stock has jumped 59% against its 52-week low of ₹249.20 touched on May 12, 2022.

The mega-cap heavyweight stock has outperformed the BSE FMCG index and the BSE Sensex in terms of returns in the last one year. In the past 12 months, the largecap share has given 47% returns to its shareholders as compared to 18% and 1% growth in FMCG index and the Sensex, respectively. The counter has gained over 21% in six-month and 18% in three-month period, while it rose by 3% in a month. On the year-to-date (YTD) basis, the stock has jumped 19%, while it added nearly 4% in a week.

Most of brokerages have assigned long term price targets for ITC, with an average target of ₹414.77, a potential upside of 5% from the current market price, as per Trendlyne data.

Analysts view of ITC Q4 results:

Prabhudas Lilladher has given “Accumulate” rating with a price target of ₹438. According to analysts at the brokerage house, the Kolkata-headquartered conglomerate is expected to be one of the best performers in consumer segment in the January-March quarter of 2022. The net profit of the company is expected to grow by 20.8% YoY to ₹5,060.9 crore in Q4 FY23, while sales is projected to rise by 11% YoY to ₹17,236.5 crore. The company’s cigarette volumes are seen expanding by 14%, while FMCG business is expected to post 17.5% sales growth with YoY margin improvement. Among others, paper business is projected to grow 26%, while hotel revenues is likely to expand by 66.3%.

ICICI Direct expects ITC to register 6.3% revenue growth in Q4FY23, led by a 15.9% growth in the cigarettes business. Net profit is expected to grow 17.2% to ₹4,911.8 crore. The agency estimates around 13% volume growth in cigarettes, while FMCG business is expected to see 19.1% sales growth led by strong traction in foods, discretionary & stationary categories. The hotels segment is estimated to grow 77.8% led by post-covid pent up demand. The growth in the paperboard segment is expected to moderate given RM prices have declined & companies are taking price cuts accordingly. The segment is likely to grow by 7.6% in Q4. Agri business is likely to see a 25.4% sales decline on account of export restriction on wheat. The brokerage expects 340 basis points (bps) gross margin improvement & similar expansion in operating margins to 35.3%.

JM Financial expects ITC to post a profit of ₹4,798.5 in Q4 FY23, up 14.5% as compared to a year ago. The sales are expected to grow 7.7% YoY to ₹17,483 crore, supported by double-digit volume growth in cigarettes. The non-cigarettes segments - FMCG, Hotels & Paper - are also projected to continue contributing strongly.