Investment Pick - ITC Ltd.
* ITC reported Q2FY21 wherein YoY growth was muted while improvement was seen in sequential numbers. Net revenue was flat (up 0.9% YoY) while EBITDA and PAT declined by 11% and 19.7% YoY. Comparing sequentially better numbers were posted wherein its revenue grew by 26% QoQ, while EBITDA and PAT grew by 53.4% and 38% QoQ. The growth was largely driven by improved traction in all its businesses.
* We believe at present ITC’s growth is largely dependent on its FMCG business as other businesses are seeing improvement but the pace would be gradual. Further amongst the FMCG, focus will continue on driving staples, health and hygiene and convenience food products which would help it to deliver strong growth. Besides, ITC has prudent management team, healthy balance sheet with strong cash flow and also pay decent dividend which is a positive. However considering Covid impact on its businesses we have lowered are target price to Rs 238, but we have maintain a Buy rating on the stock.
Buy ITC Ltd @ 9-12 Months CMP 187.9 TGT 238
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