Buy ITC Ltd. For Target Rs. 575 - Motilal Oswal Financial Services
* Cigarette business expected to show stable volumes and pricing, with the portfolio continuing to grow, aided by improvements in product mix. We model ~4% volume growth in the business in 3QFY25.
* We expect 7% YoY sales growth in cigarette business and 5% YoY sales growth in FMCG business.
* We expect 6% YoY growth in cigarette EBIT with 70bp decline in margins due to rise in leaf tobacco prices. In the FMCG business, we expect 3% de-growth in EBIT with 60bp decline in margins as price hike lags RM inflation.
* The paper segment remained weak, while the agriculture segment and hotel business performed well during the quarter
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