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Motilal Oswal Report
ITC Ltd. remained under brokerage focus after Motilal Oswal retained its 'Neutral' rating and Rs 300 target price on the stock following its Q1 FY27 results.
While the brokerage acknowledged healthy growth in FMCG and paper businesses, it remains cautious on the cigarette segment, where tax-related pressures and sluggish price pass-through are expected to weigh on earnings in the near term.
ITC Q1 Results Highlights
ITC reported a 22% YoY decline in consolidated net cigarette revenue (Rs 10,410 crore) vs. our expectation of an 18% decline. Given a sharp increase in taxes, ITC has adopted a calibrated price hike strategy (unlike immediate tax pass-on historically) to protect the loss of consumers to illegal cigarette markets.
Volume declined by high single digits. Cigarette price hikes are still in progress, and the cumulative hike has not reached the tax-neutral level. Consolidated Ebit declined by 32% YoY to Rs 3,770 crore (estimate Rs 4,110 crore. Standalone Ebit fell 35% YoY.
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