'Buy' This Stock For +17% Upside In 6 Months: HDFC Securities

Brokerage firm HDFC Securities has recommended investors to buy ITC Ltd.'s stocks with a potential upside of 17.32%, within a target period of 6 months (2 quarters).

Target Price

The Current Market Price (CMP) of ITC Ltd is Rs. 231.85. The brokerage firm, HDFC Securities has estimated a Target Price for the stock at Rs. 272. Hence the stock is expected to give a 17.32% return, in a Target Period of 6 months.

Stock Outlook
Current Market Price (CMP)	Rs. 231.85
Target Price	Rs. 272
6 months return	17.32%

Company performance

ITC's FMCG business gained momentum due to Covid-19 as revenue in 9MFY21 grew by 14% Y-o-Y, while EBIT witnessed 2.3X growth (driven by hygiene and personal care categories) as margins doubled. The paper boards and packaging business grew by 17% in 9MFY21. The agri-business had a good Q3FY21 with 18.5% Y-o-Y growth, driven by trading opportunities in rice, soya, and wheat exports. However, leaf exports were impacted by subdued demand for leaf tobacco in international markets.

Comments by HDFC Securities

Maintaining a Buy rating HDFC securities said, "Taking the advantage of the favorable market, the company came up with 100+ launches post lockdown. We expect this strong momentum to continue in the near future." The firm additionally mentioned that ITC's hotels business (3.4% of revenue) is likely to stay impacted due to travel restrictions.

About the company

ITC has a diversified presence in cigarettes, FMCG, hotels, packaging, paper boards, and specialty papers, and agri-business. Apart from having a near-monopoly in its traditional business of cigarettes, ITC is the country's leading FMCG marketer, a clear market leader in the Indian paper board and packaging industry. ITC is a globally acknowledged pioneer in the wide-reaching agribusiness and a pre-eminent hotelier in India - a trailblazer in 'Responsible Luxury' chain of hotels.

Disclaimer

The above stock was picked from the brokerage report of HDFC Securities. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.

(Also read: 'Buy' This Stock For +40% Upside, In 1 Year: Sharekhan Recommends)