Buy ITC; target of Rs 525: Emkay Global Financial

Emkay Global Financial's research report on ITC

From the core cigarette business perspective, we expect rational tax hikes ahead, given higher share of the ad-valorem component leading to build-up of volumes, which along with improving mix would aid a high-single-digit EBIT growth. In non-cigarette operations, we continue to see profitable growth and improving return profile, where segments are self-sufficient to address their growth needs. Amid the enhanced demand setting in F&B, Agri export and Paper, we see execution to be key. We continue to see ahead-of-time capex as a business moat, which enhances the company’s structural prospects. Value unlocking in Hotels operations remains a near-term catalyst.

Outlook

We maintain our BUY recommendation on ITC with Jun-24E target price of Rs525/share, as we see firm structural prospects.