Goldman Sachs has reiterated its ‘Buy’ rating on ITC with a target price of ₹490 following a resilient Q4FY25 performance, even as margin pressures impacted profitability across segments. The brokerage believes input cost headwinds—especially in tobacco and palm oil—are temporary, and ITC remains well-positioned to recover operating leverage in the coming quarters.
ITC reported a 9.4% YoY increase in standalone revenue to ₹17,248 crore, driven by steady cigarette volumes (estimated to have grown between 4–5%) and consistent performance in the FMCG segment. However, the company’s standalone operating margin declined to 34.7% from 37.1% a year earlier, primarily due to inflation in key commodities.
Goldman Sachs noted that comparable EBITDA grew 2.5% YoY, with most of the margin drag coming from elevated tobacco leaf costs in the cigarette business. Nevertheless, the brokerage expects these input cost pressures to gradually ease, helping margin recovery in FY26.
In the FMCG segment, inflation in palm oil prices weighed on margins, but Goldman sees encouraging signs as palm oil prices have corrected significantly in recent months. This is expected to benefit ITC’s branded packaged foods and personal care portfolios.
The paper business continues to remain under pressure due to high input costs and global pulp price volatility, and Goldman expects it may take a few more quarters for the segment to stabilise. Despite near-term margin headwinds, the brokerage maintains that ITC’s diversified portfolio, consistent cash generation, and defensive nature make it an attractive long-term investment.
Disclaimer: This article is based on the brokerage report by Goldman Sachs. It does not constitute investment
