ITC continued to deliver a healthy performance in core segments despite a challenging consumption environment. Though margins remained under pressure YoY, sequential improvement was seen.
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Motilal Oswal Report
ITC Ltd.'s core business of cigarettes saw steady performance. With stable taxes on cigarettes, we anticipate stable growth in this business. We model a 6% revenue CAGR in FY25-28E.
We expect supportive macroeconomic factors to act as a catalyst for boosting consumption sentiment. In line with that, we expect FMCG performance to improve in the coming quarters. We model 9% revenue CAGR during FY25-28E.
If ITC sustains mid-single-digit volume growth in the cigarette business and the FMCG business sees a recovery in H2 FY26, we expect a valuation re-rating.
We reiterate our Buy rating on ITC with our SoTP-based target price of Rs 515 (implying 27x Sep'27E P/E).
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