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On Friday, BofA Securities updated its stance on ITC Ltd. (NSE:ITC:IN), increasing the price target to INR 470.00 from INR 465.00, while reiterating a Buy rating on the company’s stock. The adjustment follows ITC’s fourth-quarter financial results for the fiscal year 2025, which were reported to align with market expectations. The company experienced growth in net revenue, EBITDA, and adjusted profit after tax (PAT) by 10%, 2%, and 1% year-over-year, respectively.
The analyst from BofA Securities highlighted that ITC’s cigarette business, a significant segment for the company, saw net revenue and EBIT grow by 6% and 4% year-over-year, respectively. This performance matched projections, with estimated volume growth slightly surpassing BofA Securities’ expectations at around 5% year-over-year, compared to the anticipated 4%. This growth rate positions ITC favorably against its peers in the India Staples sector.
The report also noted that while ITC’s other Fast-Moving Consumer Goods (FMCG) and paper businesses had a weaker quarter, this was anticipated. The fiscal year 2025 earnings were impacted by inflationary pressures affecting both cigarette and non-cigarette FMCG businesses, as well as a cyclical downturn in the paper industry.
BofA Securities remains optimistic about ITC’s prospects, suggesting that the current challenges could reverse within the next two to three quarters, potentially leading to improved earnings growth. Based on the latest quarter results, minor revisions were made to revenue and EBITDA estimates, with changes ranging from 0 to 1%.
The new price target of INR 470 is based on a Sum of the Parts (SoTP) valuation method and implies a multiple of 25 times the forecasted earnings per share (EPS) for the fiscal year 2027. The firm’s analyst maintains a positive outlook on ITC, as reflected in the reiterated Buy rating.
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