Accumulate ITC; target of Rs 294: Prabhudas Lilladher

Moneycontrol • 1 day ago

Original source

Key Investment Pillars

  • ITC's cigarette volumes are expected to recover gradually, driven by calibrated price hikes and new product launches, with a potential upside from the company's ability to pass on excise duty increases.
  • The FMCG business is expected to continue its strong growth trajectory, driven by demand for premium products and a favorable mix of brands.
  • The paperboard and packaging business is expected to benefit from the integration of Century Paper and higher prices, although input costs remain elevated.

Thesis Validation Checklist

  • Watch for signs of gradual recovery in cigarette volumes and margins, such as increased sales and profitability.
  • Monitor the FMCG business for continued strong growth and margin expansion, driven by premiumization and favorable brand mix.
  • Track the performance of the paperboard and packaging business, including the integration of Century Paper and the impact of input costs on margins.
  • Keep an eye on potential risks, such as changes in government policies, excise duty increases, and competition from illicit cigarette manufacturers.