Accumulate ITC; target of Rs 492: Prabhudas Lilladher

Prabhudas Lilladher recommended accumulate rating on ITC with a target price of Rs 492 in its research report dated December 12, 2023.

Broker Research

December 13, 2023 / 12:41 IST

Accumulate

live

bselive
nselive

Volume

Todays L/H

Prabhudas Lilladher's research report on ITC

ITC’s Investor meet highlighted growth imperative led by broad based growth across business segments enabled by 1) Innovation 2) Efficient and agile supply chain 3) Digital/ smart ecosystem and 4) cost optimization. ITC continues to innovate and improve GTM initiatives even as cigarette business growth seems to be a function of taxation policy. ITC is aiming for 80-100bps margin expansion in New FMCG business led by premiumisation, scale and cost optimization. Hotels business is in for strong growth with huge scope to grow and rising ARR/occupancy. We found Food Tech and Nicotine derivative exports as two exciting businesses with a scope to create strong moats in long term. We continue to believe that FMCG and IT Services will create huge value for shareholders over the years.

Outlook

We remain positive innovation and digitization led strategy with sustained growth and 100% jump in ROCE of non-cigarette businesses and overall Rs947bn cash generation in last 10 years. ITC trades at 24.9/22.9x FY25/FY26 EPS with ~3% dividend yield and 9.7% EPS CAGR over FY23-26. Maintain Accumulate with SOTP based target price of Rs492.

For all recommendations report, click here