ITC Share Price: Brokerages, analysts bullish on FMCG stock post strong Q1 results; see up to 17% upside

Shares of ITC rose nearly two per cent to fresh 52-week high in the early trade on Tuesday, a day after the FMCG major on Monday reported a 33.46 per cent jump in consolidated net profit to Rs 4,462.25 crore for the quarter ended June '22. ITC had logged a net profit of Rs 3,343.44 crore in the same quarter the previous fiscal.  

Meanwhile, after strong q1 earnings by the FMCG giant, experts and brokerages are bullish on ITC stock. Many of the brokerages just not gave it a buy call, but also increased their target price for the counter.  

What should investors do with post ITC Q1FY23 results?

Speaking on ITC Q1FY23 results, Zee Business Managing Editor Anil Singhvi said the results were better than expected. " The stock is set for a target of Rs 320-325 in the near term. One should apply 'buy on dips' strategy in this counter after robust results," said Anil Singhvi.   

ITC Ltd. has posted strong results beating expectations and performing well on all fronts, said Punit Patni, Equity Research Analyst, Swastika Investmart Ltd on ITC Q1FY23 numbers.  

Stability in taxes and deterrent actions by enforcement agencies has enabled the company to gain volumes from the illicit channels in the cigarette business, said Patni.  

FMCG business has witnessed significant volume growth YOY and has been able to maintain margins despite the scorching inflationary environment. The hotel business is finally in the black and ARR & Occupancy are ahead of the pre-pandemic levels. The Paper and Agri-Business segments have been the dark horses and have led to significant growth in terms of revenue and profitability on both a YOY and QOQ basis.  

"We believe that the company is expected to generate higher returns over its cost of capital in the next decade due to its strong growth prospects in segments other than cigarette and its ability to generate robust cash flows. Further, the rising investor interest will lead to a P/E rerating," the expert added.  

Among the global brokerages, Jefferies, which revised the target price from Rs 305 to Rs 360, gave the most aggressive target of 16.88% on ITC on Monday's closing price. 

Here is what brokerages recommend on ITC share.  

CLSA on ITC (CMP: 308)   

Maintain Outperform, Target 330     

Morgan Stanley on ITC (CMP: 308)  

Maintain Overweight, Target raised to 330 from 293     

JP Morgan on ITC (CMP: 308)   

Maintain Overweight, Target raised to 350 from 305   

Jefferies on ITC (CMP: 308)   

Maintain Buy, Target raised to 360 from 305.  

Domestic brokerage house Motilal Oswal gave a buy rating with a target price of Rs 355 per share.  

"While valuations of global Tobacco peers have returned to pre-COVID levels (Jan'19), at 18.8x FY24 EPS, ITC still trades at a 26% discount to its Jan'19 valuations of 25.4x one-year forward EPS. We maintain our earlier assigned 21x EPS multiple, a 65% premium to its global peer average, and roll forward to Jun’24 earnings The stock has done well, with gains of ~17% since our upgrade to Buy in Jun’22. We see scope for further upside, based on a healthy earnings outlook," it said.

Meanwhile, shares of ITC rose around two per cent to trade on 52-week high value of Rs 316.65 per share on the BSE on Tuesday