Shares of ITC Ltd., the cigarette-to-hotels-to-agri-to-paper conglomerate have corrected more than 50% from their all-time high levels and as of Friday, October 9, are back to price levels last seen in 2017.
Such has been ITC’s underperformance that analysts tracking the stock have cut the stock’s Earnings Per Share (EPS) estimates for financial year 2027 and 2028 by 23% and 21% respectively.
As a result of the correction from the record high levels of around ₹500, shares of ITC are now trading at 17 times their estimated earnings for financial year 2027 and 15 times their estimated earnings for financial year 2028. This is in comparison to the stock’s historical average multiple of over 20 times.
At the current market price, shares of ITC now carry a dividend yield of 6%.
FAQs
What Is The Latest News That Keeps ITC In Focus
ITC shares witnessed a large block deal on Thursday, when as many as 36.66 crore shares changed hands in a large trade. The number of shares that changed hands amounted to 2.93% stake in the company. The total transaction value was worth nearly ₹9,500 crore. Block deal data on the exchanges showed that GQG was the seller in the transaction, while funds like Aditya Birla Sun Life MF, Citigroup, Fidelity, Edelweiss among others were buyers in that transaction.
What Are The Next Triggers To Track For ITC?
According to a note from Goldman Sachs, 75% of the tax increase on cigarettes has been passed on through price hikes, and that the company has undertaken calibrated pricing actions to support profitability. Another important trigger to watch going forward will be growth in the FMCG segment which was also the highlight of the company’s June quarter results. ITC’s paper segment is also likely to see a gradual recovery after the cyclical weakness, while the purchase of Happiest Minds by the company’s unit adds another ₹5 to ₹7 to ITC’s Sum of the Parts according to analysts who track the stock.
What Are The Key Risks That Lie Ahead For ITC?
Any potential near-term pressure on Cigarette price volumes, competition from illicit and other branded products, and any potential regulatory action are some of the key risks that lie ahead for ITC.
Should You Buy Or Sell ITC?
38 analysts have coverage on ITC currently, of which 21 have a “buy” rating on the stock, 115 say “hold”, while two others have a “sell” rating on the stock.
| Brokerage | Rating | Target (₹) |
|---|---|---|
| CLSA | Accumulate | 388 |
| BNP Paribas | Outperform | 380 |
| UBS | Buy | 350 |
| Jefferies | Buy | 350 |
| Nomura | Buy | 340 |
| ICICI Direct | Buy | 341 |
| Axis Capital | Reduce | 295 |
Shares of ITC are trading 2.1% higher on Friday at ₹260.3. The stock is still down 28% so far this year.