ITC Ltd. share price target

ITC’s Q1FY26 performance stood below our estimates across the board, with
revenue growth below our estimates by 3.6% mainly led by higher intersegment
adjustments, while EBITDA and Adjusted net profit stood below our estimates led by poor operational performance.

With an upside potential of 18% from the CMP, we maintain our BUY rating on the stock.

ITC posted a mixed performance in Q1FY26, with strong revenue growth driven by cigarette and agri business, while margins declined sharply and missed estimates.

ITC sustained healthy performance in core segments in a tepid consumption environment, though margins remained under pressure.

ITC’s net revenues (including other operating income) grew by 9.6% y-o-y to Rs. 17,248 crore driven by 6% y-o-y growth in the cigarette business’s net revenues and a 17.7% y-o-y growth in the agribusiness’s revenue.

Sales 3% higher vs consensus likely on strong cigarette volumes. EBITDA 5% above cons. on higher margins

We are upgrading ITC from Accumulate to BUY as we expect current margin/growth pressures to subside post 1H26. ITC is suffering margin pressure in cigarettes (high leaf tobacco prices and volume focused strategy), Paper (High wood prices and dumping) and FMCG (Tepid volumes, high input costs and hit in stationary business). However, we expect the scenario to change as leaf tobacco prices have started softening in current season, new wood supplies, integration of century paper and bottomed out margins (~40%...

Sales were 3% higher vs consensus likely reflecting strong cigarette volumes. EBITDA was 5% below expectations due to inflation

With an upside potential of 16% from the CMP, we maintain our BUY rating on the stock.

ITC delivered consolidated revenue growth (ex-hotel business) of 9% YoY (beat) in 3QFY25, mainly led by the cigarette business. EBITDA grew by 2% YoY to INR63.6b. APAT declined 7% YoY to INR48b.

ITC will complete the demerger of its hotel business effective on 1st January, 2025 with the hotel business getting listed as a separate entity on 6th January, 2025. ITC will have 40% stake in the hotel business, while the remaining 60% will be distributed to ITC’s shareholders in proportion to their holdings.

On a consolidated basis, ITC topline grew by 15.6% YoY and 11.2% QoQ to Rs222,819 mn driven by growth in Hotels, Value Added Agri products and Leaf Tobacco.

With an upside potential of 17% from the CMP, we maintain our BUY rating on the stock.

Sales were 12% higher vs consensus likely due to the volatile, pass-through-based Agri Business segment. EBITDA was in line

With an upside potential of 12% from the CMP, we maintain our BUY rating on the stock.

ITC delivered a consolidated revenue growth of 8% YoY (in line) in 1QFY25. Gross cigarette revenue grew 6% YoY led by volume growth of ~3% YoY.

Hotels and Agri segments drove sales with subdued performances in FMCG and cigarettes