ITC Q4 earnings above estimates; What should be your strategy?

    EBITDA came in at Rs 6,209.3 crore, up 19 percent YoY and margins improved to 37.9 percent from 33.6 percent.

    ITC share price will remain in focus on second day on May 19, a day after the company reported better March quarter earnings.

    ITC Limited on May 18 reported a 21.4 percent year-on-year growth in standalone net profit at Rs 5,086.9 crore for the March quarter. Net profit stood at Rs 4,190.9 crore in same period last year.

    Revenue from operations (excluding excise duty) for the company went up 5.6 percent YoY to Rs 16,398 crore from Rs 15,531 crore in the year-ago period. Both topline and bottomline beat analysts’ estimates.

    According to a poll of brokerages, the cigarette-to-soap maker was expected to report a net profit of Rs 4,764.4 crore and revenue of Rs 16,152 crore.

    On the operating side, ITC’s EBITDA came in at Rs 6,209.3 crore, up 19 percent YoY. EBITDA margins improved to 37.9 percent from 33.6 percent in the year-ago period.

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    Here is what brokerages have to say about stock and the company post March quarter earnings:

    Prabhudas Lilladher

    Broking house increase FY24/FY25 EPS by 1.6%/1.4% and target price to Rs 455 (Rs 444 earlier) as it rolls over to FY25. Cigarette volume growth for 4Q was 12% supported by broad based premiumisation in longs and king size cigarettes.

    Near term looks favourable with expectations of mid-single digit volume growth. Although FMCG margins got a boost due to PLI and state incentives, FY24 should gain from benign input costs. Hotel outlook is positive due to G20 & revival in business and foreign tourist travel.

    Paper & Paperboard segment was impacted due to weakness in market coupled with expansion related shutdowns, expect margins to recover from 4Q levels.

    While near term outlook is strong, it estimates 10.7% EPS CAGR over FY23-25. ITC has scope to increase cigarette profitability as current EBIDTA margins are 5ppt lower than peak margins. Retain Accumulate.

    Motilal Oswal

    There are no material changes in broking house estimates.

    ITC posted a healthy ~ 24% EPS growth in FY23 and Motilal Oswal expect an EPS CAGR of ~15% over the next two years. ITC’s earnings outlook is better compared to other large-cap staples players in FY24 and FY25.

    At a time when uncertainty looms over the industry due to high inflation, unpredictable monsoons, and continued weak rural sales, ITC’s earnings performance in the last couple of years has shined like a beacon.

    ITC’s dividend yield is healthy at 3.5-4% despite the stock price appreciation.

    The key challenges for ITC – an extremely punitive tax regime of the past, Covid-related disruption and commodity cost inflation – now seem to be receding. We maintain BUY rating with a Target Price of Rs 485.


    With no significant increase in tax on cigarettes, will help ITC to maintain volume growth momentum in the cigarette business in the coming quarters. Strong growth in the non-cigarette FMCG business and stellar recovery in the hotel business will drive double-digit revenue and PAT growth over the next two years.

    Despite strong run-up in ITC’s stock price in recent times, valuations at 24x/21x its FY2024E/FY2025E EPS look attractive in the backdrop consistent earnings growth visibility and good dividend payout (dividend yield of 3.7%).

    Sharekhan maintain Buy rating with a revised Price Target of Rs 485. The company remains one of the preferred picks in the large-cap FMCG space.

    Nirmal Bang

    Brokerage house continue to remain positive on ITC on the back of (1) Better earnings visibility compared to peers over the next few quarters with consistent volume delivery in the Cigarette business, improving performance of FMCG-Others segment and higher ARR in the Hotels business (2) Healthy RoE in mid-30s and (3) Valuation comfort as ITC is trading at inexpensive multiple of ~22x on FY25E.

    Dividend yield for ITC also continues to stay higher (over 4%) and changes to the model have led to 5.4%/7.6% upward revision in FY24E/FY25E EPS.

    Considering strong return ratios and consistent delivery by the company, Nirmal Bang assigns a multiple of 25x on March’25E EPS, giving an unchanged target price (TP) of Rs 485. Maintain Buy rating on ITC.

    Disclaimer: The views and investment tips expressed by experts on are their own and not those of the website or its management. advises users to check with certified experts before taking any investment decisions.

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