ITC shares in focus post-Q2 earnings: Should you buy, hold or sell?

ITC share price, ITC Q2FY25 earnings: Shares of the cigarettes-to-hotels conglomerate ITC in Friday's trade (October 25) rallied over 4 per cent to day's high price of Rs 491.90 after the bluechip company released its Q2 earnings post-market hours on the previous day. Ahead of its earnings, the stock ended lower by around 2 per cent at Rs 471.85 apiece on the BSE.

Kolkata-headquartered FMCG major for the quarter ended September 30, 2024 posted an in-line net profit of Rs 5,078.3 crore, marking an on-year increase of 3.1 per cent.  Zee Business analysts had pegged the company's net profit at Rs 5,079 crore.

Nevertheless, on the top-line front, the company posted a better set of numbers with revenue for the reporting quarter coming in at 19,328 crore, up 16.8 per cent year-on-year (YoY), as against Zee Business research estimates at Rs 17,772 crore for the September quarter. According to a regulatory filing, the revenue beat was largely driven by the company's agri and hotel units. 

ITC said it staged a resilient performance amid a challenging operating environment owing to subdued demand conditions, unusually heavy rains in parts of the country, high food inflation and sharp escalation in certain input costs. 

Also read: ITC Q2 FY25 Results: Cigarettes-to-hotels conglomerate clinches Rs 5,078 crore profit, in line with estimates

Here's how global brokerages view ITC stock post its Q2 earnings

Nomura has continued with its 'buy' rating on the stock and a slashed target of Rs 555 as against the earlier Rs 575. The brokerage noted that the company reported good sales, nonetheless, margin witnessed pressure across segments during the review period.

Volumes in the cigarette business increased 3 per cent YoY as against the estimates at 2.5 per cent but margins took a hit by 145 bps. Also, while the growth in the FMCG segment of 5.4 per cent was in-line, margins slipped 37 bps. The company's hotels business emerged strong during the July-September quarter, paper sales also improved and agri business surprised.

Another leading brokerage Jefferies continued with its 'buy' stance on the counter with the target reduced to Rs 550 from the earlier Rs 585.

Morgan Stanley also reiterated its 'overweight' call on the stock with the target of Rs 554. Key positives came from net cigarette revenues, strong hotel business momentum and the rebound in agri-business, it said. However, negatives have been weak home consumption, inflation in food inputs & tobacco leaf, & overall weakness in the paper segment.