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Buy ITC: Target Of Rs 250: Sharekhan

Sharekhan is bullish on ITC recommended buy rating on the stock with a target price of Rs 250 in its research report dated November 06, 2020.

Nov 11, 2020 / 11:30 AM IST
 
 
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Sharekhan's research repor on ITC


ITC’s Q2FY2021 performance was affected by localised lockdowns in July-August resulting in a 12% decline in volume of core-cigarette business (net sales was down by ~14%). Cigarette sales started recovering from September but yet to reach pre-COVID levels. Non-cigarette FMCG performed strongly, rising by 18.4% led by staples, operating profit grew 66% y-o-y to Rs. 366 crore (margins rose 300 bps to 9.7%). As non-cigarette FMCG business scales up, its OPM is expected to improve further and would remain stable (despite normalisation of sales in some categories in the post-COVID era). Stock trades at discounted valuation of 12.3x its FY2023E EPS, consistent improvement in the non-cigarette FMCG margins along with normalisation of cigarette business would be key re-rating trigger for the stock.


Outlook


We maintain Buy with an unchanged price target of Rs. 250.


For all recommendations report, click here


Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Broker Research
first published: Nov 11, 2020 11:30 am

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