HSBC reiterates bullishness on ITC on attractive risk-reward ratio, hikes target price

Over the past year, ITC shares have traded muted, rising around 17 percent as compared to Nifty 50's one year run of 31 percent.

International brokerage HSBC saw a series of factors that enhanced the risk reward ratio and made the broking firm more bullish on cigarettes-to-hotels major ITC.

"Factors that shape our investment thesis favourable align with ITC," said HSBC. Compared to peers, ITC's stock price trades at a widened discount, which contributes to the attractiveness of the conglomerate in the volatile backdrop.

On the cigarettes front, a stable tax regime poses as a key benefit, especially since the share price is exceptionally sensitive to excessive tax shocks, added HSBC. A key downside risk for ITC will be worst-than-expected cigarette volume growth.

However, the brokerage is bullish on ITC and maintained its 'buy' rating, while increasing its target price to Rs 580 per share. This indicates an upside of around 12 percent from the previous session's closing price.

At 12.40 pm, shares of ITC were quoting Rs 512.45, down 0.7 percent compared to the previous session's closing price.

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On October 1, ITC shared that its wholly-owned subidiary ITC Infotech India Limited has acquired 100 percent shares in cloud solutions company Blazeclan Technologies for Rs 485 crore.

Blazeclan is an AWS Premier Partner, Snowflake Elite Partner, and a leader in providing Cloud transformation solutions to customers globally, ITC said in an exchange filing. The company also has expertise in cloud migration, digital services, digital cloud consulting and data analytics & insights. It had a turnover of Rs 294.57 crore in 2023-24.

Over the past year, ITC shares have traded muted, rising around 17 percent as compared to Nifty 50's one year run of 31 percent.

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