ITC reported a powerful uptick in income, across segments through the January-March quarter as demand recovery aided the topline efficiency. The efficiency of the FMCG-to-hospitality is anticipated to get superior going forward, enhancing margins of the business, domestic brokerage firm Geojit Financial Services stated. “With constant focus on innovation and improving product mix, ITC is well-placed to capture demand across segments,” the brokerage firm stated even though keeping a ‘Buy’ rating on the stock. Currently, ITC trades at Rs 212 per share, down .61% on Wednesday.
All segments of ITC saw powerful on-year development in income through the January-March quarter, except hotels. Standalone income was up 24.1% from the preceding year to Rs 14,023 crore on account of robust recovery across all the segments boosted by elevated demand for discretionary merchandise, analysts at Geojit Financial Services stated.
Changing customer preferences to aid FMCG biz
Going forward, the brokerage firm expects ITC’s FMCG small business to continue witnessing the development momentum. “Integration of Sunrise Foods should help ITC focus on value-adding niche products which further enables margin expansion for this segment,” the report stated.
The FMCG small business of ITC, according to analysts at Gejoit Financial services, will also advantage from the altering customer getting preferences from private labels to branded ones. “This shift in behaviour could largely be attributed to increased concerns over hygiene and safety in the current pandemic scenario. ITC is well-positioned to benefit from this opportunity with adequate inventory levels, coupled with rapid expansion on outlet and stockists front to capture demand going forward,” they added.
Over 20% upside possible
So far this year, ITC’s share value has traded flat, hovering about Rs 212 levels. “Steady topline growth along with improved margins going forward should help reduce its operational leverage, further boosted by its ability to implement structural changes in its value chain,” the report stated. Geojit Financial Services has a target value of Rs 256 per share on ITC, translating to 20% upside from present levels.