Shares of ITC Ltd. have once again reached a new 52-week low of Rs 277.1 on Tuesday and is trading with cuts of more than half a percent compared to Monday's closing price.
This marks yet another disappointing day of trade for the FMCG giant, whose stock has fallen as much as 23% since the turn of the year. In the last 12 months, the shares of ITC have fallen more than 33% as well.
The severe weakness in ITC shares can be linked to the impact of elevated tax on cigarettes in February, which in turn, has forced the company to issue steep price hikes on cigarettes - a key revenue generator.
The higher price of cigarettes has led to a slowdown in volumes, thus impacting ITC's top line. In the fourth quarter earnings, ITC reported a year-on-year drop of 7% in its revenue, even though net profit increased by almost 5%.
ITC Q4FY26 (YoY)
- Net Profit up 4.9% at Rs 5,113 crore versus Rs 4,875 crore
- Revenue down 7% at Rs 16,050 crore versus Rs 17,249 crore
- EBITDA up 7.3% at Rs 6,425 crore versus Rs 5,987 crore
- EBITDA Margin at 40.03% versus 34.7% YoY
Since the cigarette tax hikes came into play in February, shares of ITC have fallen almost 12%. ITC's problems have been compounded by the Middle East tension and the closure of Strait of Hormuz, which has driven up raw material prices and input costs, ultimately leading to price hike and lowering demand.
Should you buy ITC?
NDTV Profit spoke to G Chokkalingam, Founder & MD, Equinomics Research, who offered a bullish view on the FMCG counter despite the drawdown.
"We hold Buy recommendation on itc. Expect further rise in cigarette prices and a turnaround in business cycle in paper industry and better growth in fmcg other segment. We maintain a target of Rs 377," he said.
Among the 37 analysts that track ITC, as per Bloomberg, 15 of them hold 'buy' recommendation on the counter, while 14 have a 'hold' call and eight have a 'sell' call. The average price target of Rs 343 implies an upside of 23% from current levels.
ALSO READ: ITC Q4 Results: Profit Up 5% Even As Revenue Slides, Margin Expands
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