Synopsis: How is ITC’s growth outlook, highlighting UBS’s optimism on stable demand and earnings, while Goldman Sachs cautions about rising costs and margin pressures limiting near-term profits.
The article outlines how the company’s share will react, which is engaged in our business segments at present — FMCG Cigarettes, FMCG Others, Paperboards, Paper and Packaging, and Agri Business.
With a market capitalization of Rs 3,69,306 crore, ITC Ltd’s shares closed at Rs 294.75 per share, down by 0.34 percent from its previous close. The company trades at an overvalued P/E of 18x compared to its Industry average, and has returned 40 percent in the last 5 years.
Brokerages on ITC
UBS maintains a Buy rating with a target price of Rs 395, implying 34 percent upside, driven by attractive valuations and better-than-expected earnings outlook.
UBS’s Rationale
Stable Pricing to Support Demand: ITC is focusing on maintaining stable prices across its key product segments to protect volumes. This strategy helps the company sustain demand, especially in a competitive market, while avoiding sharp price hikes that could impact consumer purchasing behavior.
Strong Demand with Limited Volume Risk: According to UBS, the company faces limited risk to its volumes despite its pricing approach. This suggests that consumer demand remains strong, supported by ITC’s well-established brands and its ability to retain customer loyalty across different product categories.
Earnings Likely to Beat Expectations: The company is also expected to deliver better earnings than the broader market expects for FY27. Stable volumes, along with disciplined execution and cost control, are likely to support earnings growth, even as some market participants remain cautious in their outlook.
Goldman Sachs on ITC
Goldman Sachs maintains a Neutral rating on ITC and has cut its target price to Rs 330 from Rs 385, implying around 14.2 percent target cut, citing margin pressures and limited near-term earnings upside despite stable demand trends.
Rising Costs Weigh on Earnings: While demand remains stable, rising input costs are putting pressure on earnings, leading to downgrades. This offsets the positives from steady growth, as higher expenses limit profitability and create concerns around margin sustainability in the near term.
Margin Pressure Across Key Segments: Gradual price hikes help protect volumes but restrict margin expansion, capping earnings upside. At the same time, pressure on cigarette margins and ongoing FMCG cost inflation continue to impact profitability, making overall earnings recovery slower and less certain.
About the Company
ITC Limited is a premier Indian diversified conglomerate (est. 1910) headquartered in Kolkata, with a dominant presence in FMCG (cigarettes, foods, personal care), Hotels, Paperboards & Packaging, Agri-Business, and IT. It is a market leader in cigarettes and a top FMCG marketer, known for brands like Aashirvaad, Sunfeast, and Bingo.
Financial highlights: The revenue from operations grew by 7 percent to Rs 20,047 crore in Q3 FY26 from Rs 18,790 crore in Q3 FY25, and EBIDT grew by 8 percent to Rs 6,883 crore in Q3 FY26 from Rs 6,362 crore in Q3 FY25. Accompanied by a net profit growth of 10 percent (adjusted) to Rs 5,018 crore in Q3 FY26 from Rs 5,013 crore in Q3 FY25.
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