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    Geojit has a buy call on ITC, target price Rs 260: Geojit

    Synopsis

    The brokerage expects ITC to fare comparatively better than its peers over the coming quarters with its operations back on track.

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    Geojit has given a buy rating to ITC Ltd with a 12-month target price of Rs 260. The share price moved up by 0.78 per cent from its previous close of Rs 205.85. The stock’s last traded price is Rs 207.45.

    Q4FY20 standalone revenues declined 6.3 per cent year on year on account of logistical disruptions and weak demand amidst lockdown. EBITDA fell 8.9 per cent year on year with margin shrinking 105 bps year on year to 36.8 per cent. PAT rose 9.1 per cent year on year aided by lower taxes. Dividend hiked 77 per cent year on year.

    Investment Rationale

    The company has all of its factories operational and is in the process of quickly ramping up production. This is in contrast to its peers, some of which have not been able to initialise operations or are running at low utilizations. According to the brokerage, ITC has an advantage when it comes to getting the products to the market to cater to improved demand as parts of the country slowly come out of the lockdown.

    The company has witnessed a strong momentum in essential consumer goods and has been able to increase capacity to service the surge in demand across categories.

    The brokerage expects ITC to fare comparatively better than its peers over the coming quarters with its operations back on track and quickly ramping up to meet the demand surge, and contribution from the recent acquisition of Sunrise Foods. At current price levels, ITC is available at attractive valuations. The brokerage continues to remain optimistic about ITC’s performance and reiterate our buy rating on the stock with a target price of Rs 260 based on SOTP valuation.

    ITC-GeojitJuly32020
    Source: Geojit

    Financials

    For the quarter ended March 31, 2020, the company reported consolidated sales of Rs 11677.97 crore, down -12.25 per cent from last quarter sales of Rs 13307.54 crore and down -10.71 per cent from last year's same quarter sales of Rs 13078.09 crore. The company reported net profit after tax of Rs 3926.46 crore in the latest quarter

    Promoter/FII Holdings

    FIIs held 14.65 per cent stake in the company as of March 31, 2020 while DIIs held 42.46 per cent and public & others 42.89 per cent.



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    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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