Accumulate ITC; target of Rs 545: KR Choksey

KR Choksey recommended Accumulate rating on ITC with a target price of Rs 545 in its research report dated August 23, 2024.

Broker Research

August 26, 2024 / 12:31 IST

Accumulate

26 Aug, 2025 12:21

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KR Choksey's research report on ITC

For Q1FY25, ITC reported consolidated net sales of INR 184,573 Mn (+7.5% YoY/ +3.0% QoQ), which was in line with our estimates. Gross margin declined by 130 bps YoY (-271 bps QoQ). In Q1FY25, EBITDA was INR 67,484 Mn (+1.2% YoY/ +1.8% QoQ), which was in line with our estimates. The EBITDA margin declined by 230 bps YoY (-41 bps QoQ) to 36.6%. Reported PAT stood at INR 50,916 Mn (-0.3% YoY/ -0.6% QoQ). Adj. PAT for the quarter stood at INR 50,946 Mn (-0.2% YoY/ -0.5% QoQ), which was largely in line with our estimates. We maintain our FY25E/26E Adj. EPS as we expect stability in taxes and recovery in rural markets. We apply the SOTP approach and apply multiples (cigarette business at 15.5x EV/EBITDA, Hotels at 17.3x, Paper business at 4.1x, Agri business at 4.5x, and FMCG at 9.0x EV/Revenue) and arrive at a target price of INR 545/share (previously: INR 517); offering an upside of 7.7% from current levels.

Outlook

Accordingly, we downgrade our rating to “ACCUMULATE” from “BUY” on ITC Ltd shares, considering that the share price has appreciated by 17.4% since our last quarterly result update.

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