Buy ITC; target of Rs 450: Sharekhan

Sharekhan's research report on ITC

Recent amendment in the Finance Bill 2023 on tobacco/tobacco products is unlikely to have any material impact on tax rates on cigarettes. Volume growth momentum in the cigarette business is likely to sustain in the quarters ahead. Consistent good growth in the cigarette business, strong tailwinds in the hotel business and scale-up in non-cigarette FMCG business makes its earning visibility better compared with peers. ITC will continue to invest approximately Rs. 3,000 crore p.a. to support its key businesses and accelerate growth in the coming years.

Outlook

We reiterate Buy on ITC with an unchanged PT of Rs. 450. Attractive valuations at 23x/21x its FY2024/FY2025E EPS and double-digit earnings growth visibility make it our preferred pick in the large consumer goods space from a medium to long-term perspective.