ITC shares rallied 7.5 percent intraday Monday after fourth quarter earnings performance. Majority of brokerages maintained their rating on the stock but raised target price, citing revival of cigarette business.
With retaining outperform rating, Credit Suisse increased target price to Rs 385 from Rs 370, saying the company recorded strongest EBITDA growth in 7 quarters and cigarette business performance was the best in 11 quarters.
According to the brokerage, only overhang now is the uncertainty with goods & service tax (GST).
JP Morgan has also maintained overweight with increased target at Rs 370, saying the stock is reasonably valued at 24 times FY17 and 21 times FY18.
ITC’s Q4, on last Friday, beat analysts’ expectations on revenue front while profit and operational performance was in-line. Profit grew by 5.7 percent and revenue rose 9.4 percent compared to year-ago period. Operating profit (earnings before interest, tax, depreciation and amortisation – EBITDA) climbed 13.6 percent and margin expanded by 140 basis points YoY.
Cigarette business showed 10.2 percent year-on-year growth with EBIT rising 11.5 percent and moderate decline in volume.
Meanwhile, the company announced bonus of one share for every two shares held.
At 10:37 hours IST, the scrip of ITC was quoting at Rs 340.35, up Rs 10.40, or 3.15 percent amid high volumes on BSE.