Shares of ITC Ltd
rose 1% on the NSE in late morning trade on Thursday. The company, on Wednesday, reported a decent set of numbers for the quarter ended December 2018, which were broadly in line with the estimates on the operating fronts. The company’s revenue (net of excise duty) grew 14.9% yoy to Rs11,227.7cr, ~5% higher than the consensus estimates.
grew 9.6% yoy, while FMCG, Hotels, Agri, and paperboard businesses reported revenue growth of 11.5%, 11.7%, 25.7% and 20.5% yoy, respectively.
Meanwhile, foreign brokerage house
Credit Suisse has maintained its 'outperform' call on the stock with a target price of Rs360. Cigarette EBIT growth is not a cause of worry and volume is recovering with price stability, the firm has said.
Macquarie has also maintained 'outperform' with a target price of Rs376 and has highlighted that the cigarette margin pressure will subside.
ITC Ltd share price is currently at Rs280.40, up Rs2.7, or 0.97%, from its previous close of Rs277.70 on the BSE. The scrip opened at Rs279.45 and has touched a high and low of Rs282.40 and Rs279, respectively.
We believe that the company is looking at delivering healthy overall EBIT growth and since other businesses are doing well, the cigarettes division is getting some space to stabilize and grow volumes as the company has witnessed 15% volume decline in this division over FY14-18. We are estimating cigarette volume growth of 6% for FY19E and 1% each for FY20E and FY21E with an ~8% price hike in each FY20E and FY21E.
We continue to recommend our "Buy" call on the stock with a target price of Rs335. At CMP, the stock is trading at 22x FY21E EPS.