Analysts remained bullish on ITC Ltd. while a few hiked target prices as the cigarettes-to-hotels conglomerate reported its highest ever quarterly profit.
Net profit rose 36.2 percent year-on-year to Rs 4,023.1 crore in the quarter ended September, according to an exchange filing. That was mainly aided by a lower tax expense and higher other income.
Its total tax expenses fell by nearly half over the year-ago period to Rs 784.60 crore. Other income rose 30 percent to Rs 654.3 crore.
The company's margin also expanded at a time Indians are curbing spends on everything from consumer goods to cars.
On Friday, ITC shares rose as much as 3.3 percent to Rs 257.20 apiece compared with a 0.54 percent gain in the NSE Nifty FMCG Index. The stock is the second-best performer on the Sensex and Nifty.
Here's what analysts have to say about ITC Q2 Results 2019-20
Credit Suisse
- Maintains ‘Outperform' and hikes target price to Rs 330 apiece from Rs 320.
- Second quarter steady, broad-based EBIT growth.
- ITC staying away from large price hikes to give more room for cigarette volumes to recover.
- FMCG growth impacted by slowdown, but strong margin expansion continues to play out.
Emkay
- Maintains ‘Hold' and hikes target price to Rs 274 apiece from Rs 267.
- Second-quarter results were in line, but cigarette performance continues to be subdued.
- FMCG growth was slower though margins showed further improvement.
- Downsides appear to be limited after the significant underperformance but growth triggers still missing.
UBS
- Maintains ‘Buy' with a target price of Rs 350 apiece.
- Cigarettes steady; rural slowdown hurts FMCG.
- ITC cigarettes: volume and margins improve.
- Margin outlook, environment, social and corporate governance concerns have kept stock range bound.
Prabhudas Lilladher
- Maintains ‘Buy' with a target price of Rs 344 apiece.
- Another steady quarter in a challenging environment.
- Uptick in consumer demand holds key to volume recovery in FMCG.
- Risk reward remains favorable, although uncertainty on cigarette taxation remains a drag.
Edelweiss
- Maintains ‘Buy' with a target price of Rs 345 apiece.
- Second-quarter performance along expected lines.
- Slowdown mars FMCG revenue growth, but margins improve.
- Other business clock steady performance.
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