Nomura’s latest call puts ITC back in the spotlight. The brokerage has upgraded the stock to Buy and raised its target price to ₹340. The move reflects higher optimism on the business performance of ITC and its ability to deliver better return for investors.
On Monday, Nomura upgraded ITC Ltd to “Buy” from “Reduce” and increased the 12-month price target to ₹340 from ₹300 citing better than expected resilience in core businesses and an improved margin outlook. The revised stance is supported by the recent volume recovery in cigarettes, steady performance in the FMCG portfolio and cost rationalisation initiatives, the brokerage said.
Key takeaways
- Rating change: Reduce → Buy by Nomura.
- New target: ₹340 (previously ₹300).
- Rationale: Better-than-anticipated cigarette volumes, steady FMCG growth, margin improvement and cost controls.
- Immediate market impact: Expect short-term positive sentiment; stock may see buying interest on the upgrade.
Analyst view and drivers
Structural strengths in ITC’s diversified business model, which includes cigarettes, FMCG, hotels and agri-commodities and efficient cost management support a higher valuation, Nomura said. The broker expects a gradual recovery in discretionary segments and continued market share gains in FMCG categories where ITC has been expanding distribution and launching new products.
What investors should consider
- Time horizon: Upgrade and target is 12 month view. Short term price reaction can be volatile.
- Fundamentals: Investors should refer to ITC’s latest earnings, margins trends and guidance to validate the thesis.
- Valuation: Compare Nomura’s target of ₹340 with other broker targets and implied upside to the current market price.
- Risks: Regulatory changes in tobacco business, slowdown in demand for FMCG and commodity cost pressures could impact the outlook.
CONCLUSION
An upgrade from Nomura suggests growing analyst confidence in ITC’s recovery and earnings resilience, but investors should factor in the broker’s view in light of the company’s fundamentals and broader sector risks before making allocation decisions.
