breaking news Itc shares hit 3-year high as cigarette revenue growth impresses Street

Shares of ITC Ltd rose 3.5% on Thursday after the fast-moving consumer goods company reported impressive revenue growth in the cigarette business. ITC’s cigarette revenue growth was 10.2%, compared to an estimate of 9-11% according to the CNBC-TV18 survey.

ITC has seen a robust and broad-based recovery in the cigarette sector despite third-wave disruptions, with volumes surpassing pre-pandemic levels.

The company said it experienced strong growth across all operating segments despite the impact of the third wave of the pandemic.

As of 9:27 a.m., ITC shares were trading at Rs 269.45, up 1.1%, on BSE. ITC stock hit a three-year high at Rs 279 on the NSE today.

ITC’s stock has risen over the past three days and is up 8.92% over the period.

Here’s a look at the cigarette maker’s overall earnings performance for the quarter ended March:

ITC FY22 Fourth Quarter Year-Over-Year Earnings Performance

Meanwhile, FMCG beat the CNBC-TV18 poll estimates on almost every front. Take a look here:

ITC Q4 FY22 Results vs. CNBC-TV18 Poll Estimates

The hotel industry has also seen a smart recovery with sequential improvement in average room rates, although they are still below pre-pandemic levels. But the domestic leisure and wedding segments drove the recovery, while business travel saw gradual improvement and the recovery in international travel was only in its infancy, the ITC said.

CLSA believes that the company will continue to progress on the road to recovery, which will help ITC’s profitability. The brokerage says to “buy” ITC shares with a target price of Rs 310.

“At a time when most peers are witnessing margin headwinds, every ITC segment saw flat to expanding margins in Q4, with smart gains in cigarettes and consumer staples” , Jefferies said in a note to clients.

Cigarette volume growth at 9% is impressive with double-digit EBIT growth, which is broadly in line, Jefferies added while maintaining its “buy” recommendation on the stock. “ITC stands out given the high margin visibility and we are retaining Buy,” the foreign brokerage added.

JP Morgan raised its rating on the stock to “overweight” while raising its target price to Rs 305, and Morgan Stanley also has an “overweight” position in FMCG company shares with a target price hike to Rs 293 against Rs 276.

First post: 19 May 2022, 09:56 STI