ITC Q1 Results Review - A Mixed Bag; Maintain Add: Yes Securities

Yes Securities Report

ITC Ltd.'s Q1 FY25 operating performance was a mixed bag with beat on topline but margins missing our estimates for the quarter. Topline growth of 7.4% was supported by strong 22.2% growth in agri-business driven by value added agri products, leaf tobacco and wheat.

Progressive scale-up of export shipments of Nicotine and Nicotine derivative products post trials should provide some further aid for the segment.

Paperboards, paper and packaging came lower than our estimate but green shoots of recovery in domestic demand are visible ahead of the festive season. Cigarette and FMCG-others business saw minor deviation growing at 6.1% (we believe with a ~2% volume growth) and 6.3% YoY, respectively.

Stability in taxes and recovery in rural markets should support growth while it continues to face pressure on margins in the very near-term from commodities in key business segments.

Based on target multiple of ~26 times (three year/five year average forward multiple ~22 times /20 times) on Sep-26E earnings per share, we arrive at a revised target price of Rs 545 (Rs 500 earlier). Maintain Add.

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