The corporate’s consolidated web revenue fell to Rs 4,229 crore within the second quarter of FY27 from Rs 5,187 crore in the identical interval final yr. Web income rose 5% to Rs 20,454 crore from Rs 19,455 crore a yr earlier.
The cigarette enterprise remained the largest drag on earnings throughout the quarter. Phase revenue declined 27.2% to Rs 3,813 crore from Rs 5,241 crore within the corresponding interval final yr, whereas web cigarette income fell 21%. ITC’s non-cigarette FMCG enterprise delivered its strongest income progress in 14 quarters, supported by larger gross sales throughout packaged meals, private care and stationery merchandise.
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Purchase, promote or maintain ITC shares?
Jefferies has maintained its Purchase score on ITC with a goal worth of Rs 350, indicating an upside of 32%. The brokerage mentioned the working atmosphere stays unsure amid geopolitical tensions, elevated crude and enter prices, and inflationary pressures. Nevertheless, Indian demand remained resilient throughout rural and concrete markets, though uneven monsoons and El Niño pose dangers to agricultural output and inflation.
Cigarette volumes and EBIT proceed to say no as a consequence of sharp tax hikes, although ITC administration has undertaken a collection of measures to navigate the difficult circumstances.
Calibrated worth hikes are anticipated to help a gradual restoration, whereas vital tax arbitrage on illicit cigarettes persists. The brokerage trimmed its EPS estimates by 2-3% however expects a sequential enchancment in cigarette tendencies.Nuvama upgraded its score on ITC to Purchase from Maintain whereas retaining its goal worth of Rs 310 per share. The brokerage mentioned the corporate’s Q2 efficiency was barely forward of estimates, regardless of strain on the cigarette enterprise following the tax enhance.
Cigarette volumes declined 7-8%, whereas cigarette EBIT fell 27% year-on-year (YoY). Nevertheless, each metrics improved sequentially, with cigarette EBIT rising 14% quarter-on-quarter (QoQ).
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Nuvama believes the cigarette enterprise is nearing the underside and expects EBIT to enhance within the second half of FY27 as ITC adjusts to the upper tax burden. The brokerage additionally highlighted the FMCG enterprise, which posted income progress of 16% and revenue progress of 28%. This marked the fourth consecutive quarter of double-digit progress for the enterprise.
Emkay retained its Add score on ITC however lower its goal worth by 3% to Rs 300 per share. The brokerage mentioned Q2 efficiency was barely higher than anticipated, with income coming in round 2% above estimates. Nevertheless, EBITDA and revenue declined 17% and 18%, respectively, following the excise responsibility enhance.
Emkay famous that cigarette volumes fell round 8% throughout the quarter. ITC didn’t go on your entire tax enhance to customers to forestall people who smoke from shifting in direction of smuggled cigarettes.
The brokerage additionally pointed to the FMCG enterprise, which recorded 16% progress, its quickest tempo in 14 quarters. Digital-first and natural manufacturers continued to carry out strongly, rising greater than 70% YoY and crossing an annual recurring income (ARR) of Rs 1,800 crore.
Nevertheless, Emkay believes weak cigarette volumes, uncertainty over additional worth hikes and the upcoming Union Finances may maintain the inventory below strain.
DAM Capital maintained its Purchase score on ITC with a goal worth of Rs 355 per share. The brokerage mentioned ITC’s EBITDA stood at Rs 5,160 crore, up 14% QoQ, and was forward of its estimates. Nevertheless, it remained 18% decrease YoY.
DAM Capital estimates that round 80% of the required worth enhance has already been applied, with the remaining enhance probably by February-March 2027. It additionally expects leaf tobacco prices to change into extra beneficial.
Disclaimer: This text has been written by Veer Sharma, who is just not a SEBI-registered Analysis Analyst or an Funding Adviser. Veer Sharma and his/her ‘relative(s)’ (as outlined below Part 2(77) of the Firms Act, 2013) don’t maintain any monetary curiosity within the firms talked about on this article as of the date of publication. The views/suggestions talked about on this article, wherever relevant, are these of the respective SEBI-registered Analysis Analyst/brokerage and have been reproduced/reported with due attribution. They shouldn’t be construed because the views or suggestions of The Financial Instances Digital or the journalist. Readers are suggested to contemplate the unique analysis report and make their funding selections based mostly on their very own evaluation. Brokerage disclaimers right here
