ITC share price trades flat ahead of Q3 results today. Should you buy, sell or hold?

ITC share price opened at ₹456.00 apiece as compared to its previous close of ₹455.45 on the BSE. 

ITC shares has gained just 5% in the past three months, while the stock is up more than 34% in one year.

According to analysts, the cigarettes to hotels conglomerate is likely to benefit from consistent volume growth in both its cigarette and non-cigarette FMCG business during the December quarter, complemented by robust momentum in the hotels segment, which is likely to contribute to the company’s earnings.

Read here: ITC Q3 preview: Net profit likely to rise over 3%, revenue up by 5%

The cigarette manufacturer may post decent numbers in Q3FY24 due to the higher share of food and beverages in its product basket that will help the conglomerate mitigate weak rural demand for FMCG due to erratic monsoon and high inflation, said Parth Shah, Research Analyst, StoxBox.

Moreover, due to the festive season, ITC’s hotel segment is expected to have robust growth in the third quarter. 

“We expect ITC’s cigarettes segment to continue to record a healthy revenue growth of around 15-20% and stable margins, aided by the relatively stable tax regime. Despite headwinds in the form of commodity cost inflation, we believe ITC’s profitability to remain intact in Q3FY24,” said Shah.

(Exciting news! Mint is now on WhatsApp Channels Subscribe today by clicking the link and stay updated with the latest financial insights! Click here!)

ITC is expected to report a net profit of ₹5,183 crore for the quarter ending December 2023, registering a growth of 3% from the corresponding quarter in the previous fiscal year, as per estimates by several brokerage firms. 

The company’s revenue in Q3FY24 is anticipated to grow over 8% year-on-year (YoY) to ₹17,425 crore.

At the operational level, EBITDA is expected to rise 4% YoY to ₹6,482 crore, while EBITDA margin is projected to expand by 36 basis points (bps) to 39.1% owing to improved sales mix and benefits of integrated manufacturing facilities.

Also Read: Q3 results today: Adani Green, Tata Motors, NTPC, LT, GAIL, ITC to BEL — over 900 companies to post Q3 results 2024

Cigarette volumes likely to expand by 3% on account of high base and impact of cyclone in strategic markets of south India. 

ITC’s Hotels business is expected to show strong growth while FMCG will sustain margin expansion in a tough demand environment. 

“We expect mid single revenue growth. We expect normalized cigarettes to grow 8% YoY (3% volume), FMCG to grow at 8% YoY, hotels (continued strong momentum), papers (decline) on account of high base and agri to grow on lower base,” Axis Securities said.

Going forward, key monitorables for ITC would be demand outlook on rural versus urban, competitive intensity, trends in raw material prices and outlook on hotels and agri business.

Should you buy, sell or hold ITC shares

Among ITC stock recommendations, brokerage firm Prabhudas Lilladher has an Accumulate rating with a target price of ₹487 per share.

Motilal Oswal Financial Services has a ‘Buy’ call on ITC shares and a target price of ₹535 apiece. ITC remains its top pick.

“The cigarette business continues to deliver volume growth and market share gains in the softening of competition from illicit trade. The FMCG – Others segment has also delivered strong growth across markets and product lines, and as input prices decline, we anticipate an expansion in margins too,” Motilal Oswal said. 

At 9:20 am, ITC shares were trading 0.65% lower at ₹452.50 apiece on the BSE.

Catch Live Market Updates here

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.

Milestone Alert!
Livemint tops charts as the fastest growing news website in the world 🌏 Click here to know more.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it’s all here, just a click away! Login Now!

Published: 29 Jan 2024, 09:22 AM IST