Jefferies has reaffirmed its positive stance on ITC, maintaining a ‘Buy’ rating with the potential upside of 17%, setting a target price of Rs 530 per share, emphasizing the company’s potential for growth in the future.
According to jefferies report, ITC’s strategic focus on becoming future-ready through enhanced agility, innovation, strategic investments, and cost optimization has positioned the company for substantial growth.
In the report, Jefferies said that there are promising signs in ITC’s efforts to diversify its revenue streams, with the share of non-cigarette EBITDA experiencing a notable increase. This positive trend is accompanied by an improvement in Return on Invested Capital (RoIC).
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Jefferies highlighted ITC’s resilience in the face of challenges, particularly in its Fast-Moving Consumer Goods (FMCG) business. Despite a temporary dip in rural demand, ITC’s FMCG segment is deemed well-positioned to capitalize on the expected upturn in consumer spending.
Jefferies suggests that the recent bottoming out of rural demand presents an opportune moment for ITC to capture market share and further strengthen its presence in the FMCG sector. The report also states that ITC’s management is optimistic about the prospect of a stable tax regime for cigarettes.
Recognizing the historical impact of high taxation on the industry, the management is hopeful that a consistent and predictable tax environment will contribute to sustained growth. Jefferies echoes this sentiment, emphasizing that stable taxation is crucial for the long-term success of the cigarette business.
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Jefferies also underlines that historical data indicates that excessively high taxation on cigarettes has been counterproductive, leading to adverse effects on revenue generation and overall industry health. By expressing hope for a stable tax regime, ITC’s management aims to foster an environment conducive to sustainable growth and investor confidence.
