ITC Q2 Results: Almost every analyst on the Street wants investors to buy the stock

A majority of analysts tracking FMCG major ITC Ltd. have maintained their 'Buy' ratings on the stock after the company reported a steady performance for the September quarter, with revenue (excluding the agri business) rising 7% year-on-year.

What's good

Cigarette volumes grew 6%, slightly above expectations of 5-6%, while FMCG revenue rose 7%, beating estimates of 3-4%. Excluding the notebooks segment, FMCG revenue was up 8%.

What's not

The agri business remained a drag, with revenue declining 31% year-on-year, due to seasonality and a high base. The company also saw pressure on value-added exports, which were hit by geopolitical uncertainty and US tariffs.

What brokerages say

Jefferies has a 'Buy' rating on ITC with a price target of ₹535. The brokerage said cigarette volume growth remained strong, rising around 6% year-on-year, which is better than many FMCG peers. However, operating margins were under pressure due to higher tobacco costs and intense competition.

Growth in the FMCG segment picked up pace, though margins stayed weak. Overall, operating profit grew 2% during the quarter. The management expects business momentum to improve in the coming quarters.

Citi also has a 'Buy' call on ITC with a price target of ₹500. The brokerage said second-quarter revenue fell 2%, dragged down by the agri business, but excluding that, revenue rose 8%. Both operating profit and net profit were up 2% year-on-year.

The brokerage noted investor concerns around slower growth compared to rivals and pressure on margins, but believes ITC's product mix and brand strategies will help protect its market share.

Nomura, which also has a 'Buy' rating with a price target of ₹540, said the company's results were broadly in line with expectations. It sees a recovery ahead in the paperboard segment, while the agri business faced a high base and the foodtech segment continues to expand.

ITC shares are currently trading at about 23 times their projected earnings two years ahead.

Of the 39 analysts that have coverage on ITC, 37 of them have a 'Buy' rating, which one each has a 'Hold' and 'Sell' recommendation on the stock.

Shares of ITC Ltd. settled 0.53% lower on Thursday at ₹419.35, ahead of the earnings announcement. The stock is still down 13% so far this year.