Buy ITC Ltd For Target Rs. 515 by Motilal Oswal Financial Services Ltd
* The cigarette business is expected to show stable volumes and pricing, with the portfolio continuing to grow, aided by improvements in the product mix. We model 5% volume growth in the business in 1QFY26.
* We expect 6% YoY sales growth in the cigarette business and 4% YoY sales growth in the FMCG business.
* We expect a 5% YoY growth in cigarette EBIT, though margins may contract 40bp due to rising leaf tobacco prices. In the FMCG business, we expect a 16% decline in EBIT, with a 170bp margin contraction as price hikes lag RM inflation.
* The paper segment remained weak while agriculture segment performed well during the quarter.
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