Should you buy, sell, or keep ITC stock given its new 52-week high and 3 percent increase in Q1 net profit?

ITC's consolidated net profit increased 33.46 percent on-year to Rs 4,462.25 crore in April–June 2022, setting a new 52–week high of Rs 316.65 per share on the BSE on Tuesday. In the comparable quarter of the previous year, the company had a profit of Rs 3,343.44 crore. ITC stock has surpassed the previous record high, set on Monday at Rs 308.80. The stock could rise by up to 15%, according to analysts, who have set a target price of Rs 355 per share. ITC's share price has increased by more than 50% over the past year, and by 42.13 percent so far this year. In the past six months, the stock has increased by more than 34%, and in just one month, by 7%. Analysts highlighted that momentum in other companies is anticipated to remain strong, with the exception of the agribusiness, where the prohibition on wheat exports may result in relatively muted growth in following quarters.

Financial Services by Motilal Oswal

A better than anticipated demand recovery, a good margin outlook, strong sales momentum in the FMCG industry, less drag from the hotels business, and improved capital allocation in recent years have all encouraged Motilal Oswal Financial Services analysts to become more positive on the company. ITC still trades at a 26 percent discount to its Jan'19 valuations of 25.4x one-year forward EPS, they claimed, even though valuations of global tobacco rivals have reverted to pre-COVID levels (Jan'19), at 18.8x FY24 EPS. On the basis of a positive earnings projection, analysts stated that there was room for further gains.

BUY | Target price: Rs. 340 | Potential upside: 10.6%

According to analysts, inflationary headwinds manifested as a slowdown in consumer spending and a squeeze on volume, especially in rural regions. While there has been some stabilisation in input costs, they continue to be an important indicator for ITC to watch, coupled with rural demand and limitations on wheat exports. ITC is currently trading at 22x/20x FY23E/FY24E EPS at the current market price. We lower ITC a notch down to Accumulate rating from Buy before, with a reduced target price (TP) of Rs 340 (Rs 310 earlier), valuing it at a ratio of 22x on March'24E EPS, they added.

Securities by ICICI

ADD | 350 Rs. is the target price; the upside is 13.8%

The expectation that Value (based on the current FCF profile) will outperform Growth/Expensive basket, potential price increases for cigarettes in the current inflationary environment (better consumer acceptance likely), strong underlying performance in the FMCG business, and improving outlook (cyclical upturn) for the hotels business are all expected to benefit ITC stock, according to analysts at ICICI Securities. Tax increases that are considerably earlier than inflation could cause volume pressure (on cigarette sales), according to ICICI Securities, as price elasticity is still unfavourable.