HSBC has maintained its ‘Buy’ rating on ITC with a revised target price of ₹510, citing its attractive valuation and stability in cigarette taxation as key positives for long-term investors. The brokerage stated that ITC’s Q4FY25 results were broadly in line with expectations, with solid growth in the core cigarette business and early signs of margin improvement in FMCG.
ITC reported a 6% YoY increase in cigarette segment revenue, which HSBC estimates was entirely volume-led, given the absence of significant pricing actions. EBIT from the cigarette division rose 4% YoY, reflecting stable demand, despite pressure from rising tobacco input costs.
The brokerage highlighted that FMCG segment margins improved sequentially, although overall revenue growth remained modest. HSBC believes this trend is set to accelerate in coming quarters as input cost inflation — especially in edible oils — begins to normalise.
With ITC’s tax burden on cigarettes remaining unchanged in recent Union Budgets, the brokerage sees low regulatory risk, a factor that underpins HSBC’s confidence in the stock’s earnings visibility and cash flow profile.
Additionally, HSBC believes ITC offers a compelling risk-reward, especially in an environment where investors are looking for defensive names with strong dividend payouts, stable earnings, and limited macro sensitivity.
Disclaimer: This article is based on the brokerage report by HSBC. It does not constitute investment advice. Investors are advised to consult their financial advisors before making any investment decisions.
