ITC Q1 Results Review - Rich Valuations; Reduce: Dolat Capital

Dolat Capital Report

ITC Ltd.'s Q1 FY25 results came in-line. Our analysis suggests that cigarette business reported ~3% volume growth – in line with our estimate. However, given consolidation of industry volumes on a high base, the business reported 7.6% sales compound annual growth rate over last five years. We expect near-term volume and market share gain in this business.

FMCG business reported 6.3% revenue growth with 30 bps expansion in Ebit margin. Notably, the FMCG business witnessed competitive intensity from local players.

We have maintained our FY25/26E EPS estimates at Rs 17.0/18.9 as Q1 performance was in line with our estimate.

Given the recent runup in stock price, we maintain ‘Reduce’ rating with SOTP based target price of Rs 510 (earlier Rs 443). Buy on dips.

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