ITC Target Price Cut — Here's Why Morgan Stanley Is Concerned
ITC Stock: Earnings in FY26 could be down 3% and in FY27 by 4%, project Morgan Stanley analysts,
Multinational investment firm Morgan Stanley has reduced the target price for ITC Ltd. to reflect its updated earnings forecast for the current and upcoming fiscal years.
Analysts have updated the model for fiscal 2025 actuals and introduced the FY28 estimates. Earnings in FY26 could be down 3% and in FY27 by 4%.
They project 1% and 2% revenue growth in FY26 and FY27, respectively, largely owing to the agri business and building a 5% volume growth in the cigarettes business in FY26 compared to 4% earlier. On the operating side, they lowered the Ebitda margin by 175-250 basis points, owing to margin cuts across segments due to inflation, as well as weaker margins in FY25.
Morgan Stanley estimates a 9% revenue, 11% Ebitda and 10% profit CAGR for ITC over the next three years.
"Our scenario values are down by 5-7%, owing to earnings changes, partly offset by the roll forward of our residual income model by four months to August 2026," the note said. The other RI assumptions, such as cost of equity and terminal growth, are unchanged.
ITC Target Price
Morgan Stanley has a 12-month price target of Rs 469 on the ITC stock, compared to Rs 500 earlier.
Bull Case: Rs 691 versus Rs 651 earlier
Base Case: Rs 446 versus Rs 416 earlier
Bear Case: Rs 309 versus Rs 294 earlier
The ITC share price has declined 16% in the last 12 months and 19% so far this year.
