ITC’s third-quarter performance saw strong revenue growth in most segments, barring agriculture, but margin pressures weighed on the overall results. Morgan Stanley (MS) maintained its ‘Overweight’ rating with a target price of Rs 578, highlighting that cigarette revenue growth was a key positive surprise. The brokerage noted that the EBITDA was weak across segments, except for agri, which performed better than expected.
The company also announced an acquisition in the fresh & chilled deli meats and ready-to-cook category, marking another expansion in its food business. This was seen as a strategic move to strengthen ITC’s presence in the growing processed foods market.
JPMorgan also maintained an ‘Overweight’ rating, with a lower target price of Rs 505, citing a mixed Q3 performance. The revenue was in line with expectations, but margins remained slightly weak, mainly due to raw material inflation in the FMCG business. The cigarette segment continued to post volume-led revenue growth, while hotels and agri performed well. However, the paper segment margins hit a new low, weighing on overall profitability.
Despite near-term challenges, JPMorgan highlighted that ITC’s valuations remain reasonable, trading at 25x FY26 P/E with a 3%+ dividend yield, making it a stable long-term pick in the FMCG space.
