ITC Ltd's stock fell nearly 2% after the business reported a drop in consolidated net profit for this quarter of fiscal 2021.
The company is the largest tobacco company, with a diverse business portfolio that includes FMCG, agribusiness, paperboard and packaging, hotels, and information technology.
ITC, the cigarette-to-hotel conglomerate, recorded a consolidated net profit of Rs 3,755 crore for the quarter ended March 31, 2021 (Q4FY21), down 3% from Rs 3,856 crore in the same quarter a year ago (Q4FY20).
The stats are generally satisfactory, but the main concern is that the cigarette industry's dependence remains high, at around 82 percent, even in the future.
The FMCG giant's consolidated revenue from operations increased by 22.6 percent to Rs 15,404 crore in the third quarter from Rs 12,560 crore the year before.
For the fiscal year 2020-21, the board has recommended a final dividend of Rs 5.75 per share.
Revenue from the cigarette company increased by 13% to Rs 6,508 crore from Rs 5,750 crore a year ago, while earnings before interest and tax (EBIT) or pre-tax profit increased by 6.7 percent to Rs 3,895 crore from Rs 3,649 crore in the previous quarter.
Should You Buy ITC Shares?
Broking firm Emkay Global has set a solid target of Rs 265 on the stock. In its latest report post the results, the broking firm has said, "We cut FY22E/23E EPS by 8%/3%. We expect earnings to improve with full unlocking and estimate 12%/17%/10% earnings growth in FY22/23/24. Valuations at 15 times can offer upsides with improvement in growth. Retain Buy with a target price of Rs 265."
Following ITC's March quarter report, other brokerages have mixed opinion about the company. While JPMorgan is 'neutral,' UBS and Morgan Stanley are positive on the stock. Gujarat Gas was also reduced from a 'buy' to a 'outperform' by CLSA.
The fact that ITC is a nice 5-6% dividend yield play is what experts appreciate about it. ITC may be an excellent option for dividend investors who want to reduce their downside risk, but it is not a strong choice for growth investors who want to outperform the market.
Market Cap: 2.60 Lakh Crores
P/E ratio: 19.56
Div yield: 4.77%
52-wk high: 239.20
52-wk low: 163.35
At 12.45 pm, shares of ITC were trading at Rs 210.05, lower by 2.44% on NSE. It touched an intra-day high of Rs 212.45 and a low of Rs 209.30 during the early trade.