'Buy' ITC Shares Maintains Motilal Oswal Post Q1 Results But Lowers Target Price — Here's Why

While the fmcg segment is seeing moderation due to multiple headwinds. ITC has historically enjoyed industry-leading growth due to several category drivers, e.g., a large unorganized mix, under-penetration, etc.

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Motilal Oswal Report

There is no material change in our EPS estimates for FY26 and FY27. ITC Ltd.’s core business of cigarettes saw steady performance. With stable taxes on cigarettes, we anticipate stable growth in this business. We model a 5% revenue CAGR in FY26-28.

While the fmcg segment is seeing moderation due to multiple headwinds. ITC has historically enjoyed industry-leading growth due to several category drivers, e.g., a large unorganized mix, under-penetration, etc.

With the overall demand environment expected to improve, we expect FMCG performance to improve in the coming quarters. We model an 11% revenue CAGR during FY26-28.

If ITC sustains mid-single digit volume growth in cigarette, and FMCG business sees a recovery in FY26, we expect valuation re-rating.

We reiterate our Buy rating on ITC with our SOTP-based target price of Rs 500 (implying 26x Jun’27E P/E).

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