ITC’s stock price has undergone a correction of approximately 20% from its peak, catching the attention of prominent brokerages who see this as an opportune moment for investors to enter the market. This correction was spurred by the news of British American Tobacco’s stake sale, prompting analysis from HSBC, which emphasized the attractive valuation of ITC’s cigarette business in light of this development. Despite potential taxation concerns, HSBC remains optimistic, upgrading their recommendation on ITC to ‘buy’ and setting a price target of Rs 480 for the stock.
Morgan Stanley has expressed confidence that concerns regarding supply overhang will dissipate following the stake sale by BAT. With this development, the international brokerage anticipates a return to outperformance for ITC.
The bullish sentiment stems from Morgan Stanley’s positive outlook on ITC, driven by expectations of a moderate cigarette tax environment, ongoing expansion of non-cigarette businesses, and what they perceive as reasonable valuations. Maintaining its ‘overweight’ rating on ITC, Morgan Stanley has set a target price of Rs 491 per share. This represents a substantial upside of 22 percent from the closing price on March 12.
Also read: ITC Shares Drop by 20% Amidst Potential BAT Block Deal
Goldman Sachs has noted that despite significant changes within the company and the cigarette tax structure, ITC’s valuations have remained below the average seen from FY14 to FY18. Recognizing the substantial transformation ITC has undergone since FY18, the international brokerage maintains a ‘buy’ rating on the stock, setting a target price of Rs 480 per share.
“In addition to Goldman Sachs’ assessment, CLSA also underscores the growing significance of ITC’s FMCG business as a key growth driver, experiencing notable expansion and profitability gains. CLSA further predicts that the advent of quick commerce will accelerate ITC’s premiumisation strategy. Accordingly, CLSA has upgraded its rating on ITC to ‘buy’ with a target price of Rs 486 per share. On March 12, ITC’s share price closed at Rs 401.9 on the NSE, reflecting a 1.83 percent decline.
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