ICICI Direct is bullish on ITC recommended buy rating on the stock with a target price of Rs 250 in its research report dated June 27, 2020.
ICICI Direct's research report on ITC
ITC reported a dismal set of numbers with cigarette volumes down ~12% on account of 10 days loss of sales in March. The tax incidence increased 13% in Budget while the company took a blended price hike of 9% to cover this hike. Revenues fell 6.4% (net of excise dip of 9.6%) impacted by supply chain & manufacturing disruption. Operating profit also declined 8.9%. However earnings witnessed growth of 9.1%, mainly on account of a cut in corporate tax and reassessment of deferred tax liability.
We value the stock on SOTP based method valuing cigarette business at 12x PE & FMCG business at 5x price to sales with a target price of Rs 250/share.
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