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HDFC Securities Institutional Equities
HDFC Securities has maintained Add rating on ITC Ltd. with a Sep‑27 SoTP‑based target price of Rs 300, valuing the cigarettes business at Rs 137/share (11 times price-to-earnings) and other FMCG at Rs 98/share (four times sales).
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According to its channel checks, a significant portion of the required price hikes is already in place, which should help restore cigarette profitability on a per-stick basis by Q4 FY27.
The next leg hinges on volume recovery—critical to recover Ebit, adds the brokerage.
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HDFC Securities continues to factor in a 6% volume decline in FY27, with high‑single‑digit underlying weakness across 9M FY27. FY28 may still see pressure, with a 3% volume decline largely due to sharp pricing actions. The brokerage also highlighted rising illicit trade as a key risk to its volume assumptions.
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