Buy ITC; target of Rs 515: Sharekhan

Sharekhan's research report on ITC

Major uncertainties hovering around the stock are over, as BAT has sold 3.5% stake in the company. BAT is unlikely to reduce its stake below 25%. Business fundamentals of ITC are intact with steady growth in the core cigarette business and non-cigarette FMCG business witnessing consistent improvement in EBITDA margins. Efficient capital allocation plan and strong dividend payout make it a preferred pick in the large-cap FMCG space with attractive valuations.

Outlook

We reiterate our Buy on ITC with an unchanged PT of Rs. 515. Post the recent correction in the stock price, valuation at 22x/20x its FY2025E/FY2026E EPS looks attractive with favourable risk reward.

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