Morgan Stanley has maintained its ‘Overweight’ rating on ITC, assigning a target price of ₹500, implying upside from the current market price of ₹427.00. The brokerage highlighted ITC’s strategic push to scale its non-cigarette revenue mix through two new acquisitions that expand its presence in the fast-moving consumer goods (FMCG) space.
The company announced the acquisition of 100% stake in Sresta Natural Bioproducts, the maker of the ‘24 Mantra Organic’ brand, for a consideration of ₹4.7 billion, valuing the company at 1.5 times its FY24 sales.
In another strategic move, ITC will raise its holding in Mother Sparsh Baby Care from 26.5% to 73.5% by investing ₹810 million in two tranches by Q1FY27. The remaining stake is to be acquired over the next two to three years, enabling ITC to eventually take full control of the premium baby care brand.
Morgan Stanley views these acquisitions as aligned with ITC’s long-term goal of broadening its consumer product portfolio and reducing dependence on its traditional tobacco business. The report suggests these deals could accelerate ITC’s FMCG growth engine, especially in the health and personal care segments.
The brokerage’s bullish stance is backed by ITC’s expanding portfolio, improving margins in FMCG, and continued capital allocation discipline.
Disclaimer: The above views are of the broker’s and not the author or the publication’s. Please make any and every investment decision after consulting your financial advisor.
