ITC – The giant with steady growth

ITC is the largest cigarette manufacturer and seller in the country, established in 1910. ITC operates in five business segments at present: FMCG Cigarettes, FMCG Others, Hotels, Paperboards, Paper and Packaging, and Agri Business.

Quarterly Earnings Results Walkthrough

ITC reported their consolidated quarterly earnings for Q2FY2022 with their Net Sales at Rs 17108 crore in September 2022 up 24% from Rs 13757 crore in September 2021. Quarterly Net Profit was at Rs 4682 crore in September 2022 up 24% from Rs 3766 crore in September 2021.

EBITDA stands at Rs 6239 crore in September 2022 up 23% from Rs 5055 crore in September 2021.

EPS has increased to Rs. 3.73 in September 2022 from Rs. 3.02 in September 2021.

Brokerage Firms Recommendations

Motilal Oswal has recommended a buy rating on this stock with a target price of Rs 400.

ICICI Direct has recommended buy rating on this stock with a target price of Rs 405.

Sharekhan has recommended buy rating on this stock with a target price of Rs 402.

Prabhudas Lilladher has recommended an accumulate rating on this stock with a target price of Rs 365.

Technical Analysis

ITC Weekly Candlestick Chart on Sharekhan’s TradeTiger

ITC is approaching the pre-covid lifetime high of Rs 367. ITC has delivered poor returns, unlike Hindustan Unilever which is the leader of the FMCG sector.

MFI is at 83 which indicates that the stock is hugely overbought, and the price is very expensive. The stock price has overextended from its 100-day exponential moving average and this imbalance will soon result in a correction.

Multiple brokerages have reported a healthy target for this stock around Rs 400, however we believe that ITC will reverse and make a double top at its lifetime high at Rs 367.

A breakout over this level of Rs 367 will take the stock further up to new highs.

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