Why ITC shares are a good bet despite 55% rally in 2022
The consolidated net profit of ITC jumped 28.88 per cent year-on-year to Rs 9,009.53 crore for the half year ended September 30, 2022
- Dec 13, 2022,
- Updated Dec 13, 2022 1:41 PM IST
Analysts retained their bullish view on ITC shares for the next year despite over 57 per cent jump registered by the stock in 2022. Shares of the FMCG major have already soared to Rs 343.05 on December 12, 2022 from Rs 218 on December 31, 2021. Market watchers believe that robust growth momentum in cigarette, hotel and paper businesses supported ITC in the ongoing calendar year.
Meanwhile, the consolidated net profit of the company jumped 28.88 per cent year-on-year to Rs 9,009.53 crore for the half year ended September 30, 2022. On the other hand, gross revenue increased by 32.20 per cent YoY to Rs 38,125.31 crore during the same period.
Segment-wise, revenue from the cigarette business increased by 25.59 per cent YoY to Rs 15,099.48 crore during April-September 2022. Likewise, revenue from hotels, agribusiness and paperboards, paper & packaging also jumped 157 per cent, 66 per cent and 33 per cent YoY, respectively, during the first half of FY23.
While retaining his positive view on ITC, AK Prabhakar, Head of Research, IDBI Capital said, “ITC benefitted from growth in cigarette, paper and hotel business in the recent past. We are positive on ITC for 2023 as the government has kept tax stable and crack down on illegal imports to benefit the growth of the cigarette business.”
On the other hand, Kranthi Bathini, Equity Strategist, WealthMills Securities sees a 10-15 per cent upside in ITC next year. “We see limited upside in ITC as the recent rally share price has factored in all the major developments.” At present, ITC traded at a price-to-earnings ratio of 25.07 times against its five-year average of 22.93 times.
Bathini further added that shares of ITC may trade in the range of Rs 380-Rs 400 in 2023. “FMCG, hotels and cigarette businesses are doing well. The next two quarters' earnings are very important for ITC. All focus is on the much-awaited FMCG and hotel demerger announcements,” he said.
Overall, Vadilal Industries emerged as the top gainer in the FMCG pack in 2022. Shares of the company have gained 190 per cent to Rs 2640.80 on December 12, 2022 from Rs 909.70 on December 31 last year. It was followed by Ugar Sugar Works (up 185 per cent), Varun Beverages (up 133 per cent), Shree Renuka Sugars (up 94 per cent), Godfrey Phillips (up 79 per cent), KRBL (up 73 per cent) and Hindustan Foods (up 72 per cent).
Also Read: Logistics, packaging, agri value chain: How ITC is working towards abating Scope 3 emissions
Analysts retained their bullish view on ITC shares for the next year despite over 57 per cent jump registered by the stock in 2022. Shares of the FMCG major have already soared to Rs 343.05 on December 12, 2022 from Rs 218 on December 31, 2021. Market watchers believe that robust growth momentum in cigarette, hotel and paper businesses supported ITC in the ongoing calendar year.
Meanwhile, the consolidated net profit of the company jumped 28.88 per cent year-on-year to Rs 9,009.53 crore for the half year ended September 30, 2022. On the other hand, gross revenue increased by 32.20 per cent YoY to Rs 38,125.31 crore during the same period.
Segment-wise, revenue from the cigarette business increased by 25.59 per cent YoY to Rs 15,099.48 crore during April-September 2022. Likewise, revenue from hotels, agribusiness and paperboards, paper & packaging also jumped 157 per cent, 66 per cent and 33 per cent YoY, respectively, during the first half of FY23.
While retaining his positive view on ITC, AK Prabhakar, Head of Research, IDBI Capital said, “ITC benefitted from growth in cigarette, paper and hotel business in the recent past. We are positive on ITC for 2023 as the government has kept tax stable and crack down on illegal imports to benefit the growth of the cigarette business.”
On the other hand, Kranthi Bathini, Equity Strategist, WealthMills Securities sees a 10-15 per cent upside in ITC next year. “We see limited upside in ITC as the recent rally share price has factored in all the major developments.” At present, ITC traded at a price-to-earnings ratio of 25.07 times against its five-year average of 22.93 times.
Bathini further added that shares of ITC may trade in the range of Rs 380-Rs 400 in 2023. “FMCG, hotels and cigarette businesses are doing well. The next two quarters' earnings are very important for ITC. All focus is on the much-awaited FMCG and hotel demerger announcements,” he said.
Overall, Vadilal Industries emerged as the top gainer in the FMCG pack in 2022. Shares of the company have gained 190 per cent to Rs 2640.80 on December 12, 2022 from Rs 909.70 on December 31 last year. It was followed by Ugar Sugar Works (up 185 per cent), Varun Beverages (up 133 per cent), Shree Renuka Sugars (up 94 per cent), Godfrey Phillips (up 79 per cent), KRBL (up 73 per cent) and Hindustan Foods (up 72 per cent).
Also Read: Logistics, packaging, agri value chain: How ITC is working towards abating Scope 3 emissions