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ITC Stock: 68% Upside Predicted Despite Tax Woes
19 Sep
Summary
- ITC faces cigarette volume decline due to tax changes.
- Price hikes and margin improvements are expected to offset losses.
- An analyst predicts a 68% stock upside with a target price of ₹440.
ITC is navigating a critical period where tax-induced cigarette volume pressures are being counterbalanced by enhanced realisations and profitability recovery. 360 ONE Capital Research has reiterated a BUY rating with an unchanged target price of ₹440 per share, projecting a substantial 68% upside from its current trading level.
The stock, which has seen a 36% decline over the past year, is now anticipated to benefit from strategic price increases in its cigarette portfolio. The brokerage believes that pricing power now outweighs volume concerns, effectively mitigating anticipated volume degrowth, which has been revised upwards to -4% for FY27.
Beyond cigarettes, 360 ONE highlights growth prospects in ITC's FMCG, paperboards, packaging, agri, and technology segments. The integration of Century is expected to boost paperboard capacity significantly, while strong paperboard prices and benefits from lower wood costs are foreseen.
Improvements in EBIT margins are also projected as successive price hikes are implemented. Furthermore, the company is expected to benefit from lower-cost leaf tobacco inventory starting in Q3FY27, providing an estimated ₹10-15 paise per stick advantage. This multifaceted strategy underpins the bullish outlook for ITC's earnings trajectory.
