ITC share price: Should you buy or sell the stock post Q4 results, dividend announcement?

Stock Market Today: ITC share price gained more than 2% in the morning trade on Friday following the announcement of the company's Q4 results and a dividend.

On BSE, ITC share price hit the day's high of ₹435.90 apiece as against its last closing price of ₹426.10. At 10.20 am, ITC stock was trading at ₹434.80, up 2.04%.

ITC Q4 Results

The March quarter results (Q4FY25) of the diversified conglomerate ITC Ltd were announced post-market trading hours on Thursday, May 22. The company reported a consolidated net profit of ₹19,807 crore, which was enhanced by an extraordinary gain of ₹15,145 crore in Q4 due to the demerger of its Hotels Business into ITC Hotels Limited. In the consolidated financial statements, this gain was reported under discontinued operations.

The net profit after accounting for the extraordinary gain stood at ₹4,662 crore, which was less than the ₹5,190 crore recorded in the same quarter of the prior fiscal year. Operating revenue for the reporting quarter was ₹20,376 crore, which was 10% more than the ₹18,561 crore recorded in the March 2024 quarter and exceeded street expectations.

ITC: Analysts views

Jefferies India said that ITC reported broadly in-line results despite severe pressure in FMCG & paperboards. Cigarette volume growth of 5% was in line with Jefferies' expectations and appears strong in the context of growth reported by FMCG peers. 

However, Jefferies said that the business faced margin pressure (cost inflation along with limited product price hike). FMCG performance was affected mainly by tough macro conditions, resulting in a sharp EBIT decline. Paperboard segment performance was also quite weak, but was offset by a strong agri segment.

Jefferies maintains a ‘BUY’ rating on ITC stock amid reasonable valuations, with a target price of ₹535. However, the brokerage made a series of changes to its assumptions, resulting in a 1% cut in earnings per share, with a lack of visibility on the cigarette price hike being the main factor.

Motilal Oswal Financial Services (MOFSL) also maintained a BUY rating on ITC with a sum of the parts SOTP-based target price of ₹525 (30 times March’27 estimated Price to earnings). 

MOFSL said cigarettes, ITC's core business, has seen steady performance.

It expects ITC's sustainable growth in the cigarette business with stable cigarette taxation. Due to its category presence (huge unorganised mix, under-penetrated, etc.), ITC is experiencing industry-leading growth over peers, whereas the FMCG sector is experiencing moderation as a result of increased commodity costs, MOFSL added.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.