ITC Stock Jumps Nearly 5% After Q2 Earnings: Should You Buy? - All You Have To Know

The ITC Limited managed to declare Q2 FY25 as the stock measured nearly a 5% leap to ₹493.50 on October 25, just after the company announced robust performances in the fields of FMCG, hotels, and agribusiness sectors. With its position in almost seven-day sequences of losses, the positive trail of the company's stocks seemed to work well for the fund seeking investors. Analysts have been recommending a "buy" rating and have kept ITC's stocks at the focusing point for the investors wishing to deal in the FMCG and agribusiness market.

ITC Q2 Earnings Highlights
IITC's Q2 earnings came in with a YoY growth of 17% in revenue at ₹19,327.8 crore, bolstered by strong pick-ups in agribusiness and hotels. The total FMCG segment encompasses the core cigarettes business and witnessed 6.1% YoY growth to ₹14,463.15 crore. ITC's hotels business also saw a 17% YoY growth, with growth coming in from food and beverages, retail, and wedding segments. Most notably, agribusiness contributed with 46.57% YoY growth primarily led by leaf tobacco and value-added agricultural products aggregating to ₹5,845.25 crore.

On the contrary, the paperboards, paper, and packaging business reported mute growth at just 2.14% YoY in spite of the fact that business was otherwise constrained on account of the rise in cost of wood and ocean freight rates. Consolidated net profit stood 3% higher YoY at ₹5,078.43 crore.

Analyst Ratings: Strong "Buy" Sentiment
ITC - Motilal Oswal and Antique Stock Broking have maintained "buy" ratings with a target price of ₹575 and ₹557, respectively. Motilal Oswal says that ITC has a strong presence in the FMCG segment and growth is outperforming the peers in not very easy markets, led by staples, biscuits, snacks, dairy, and premium soaps.

The report quotes Antique Stock Broking stating that ITC has better consumer outperformance on account of its size and it is witnessing an increase in cigarette volume growth at 3.5% with a strong improvement in market share. It said the demerger of the asset-intensive hotel business has helped improve capital efficiency significantly, which shall be supportive in delivering a sustainable dividend yield of 3-4%.

Sector Performance and Market Trends
ITC's Q2 results thus vindicated the focus on high-growth sectors such as FMCG and agribusiness. The company has apparently realigned its trade marketing expenses for cigarettes, bolstering last-mile execution, thereby capturing a larger market share. The hotels segment has gone on a tear so far, with high demand remaining there despite the somewhat exaggerated base effects from the G20 events recently.

The agribusiness business has witnessed tremendous growth in recent times, primarily due to a rise in the demand for leaf tobacco and value-added products. Paperboards performance was, however, marred. But analysts expect sequential improvement in that area by virtue of a better marketplace.

Should you buy ITC stock?
Analysts point out that ITC's strong FMCG growth, robust hotel performance, and strength in its agribusiness business make for a sound long-term investment. Target prices from larger brokerages have the stock at ₹540 and ₹575. What is also going to add to the investment appeal of ITC are improved capital efficiencies and dividend yield.

As ITC stabilizes in stock after the Q2 earnings, it has a current window of opportunity for consideration by investors holding a position in ITC, considering sustained growth and market leadership across different divisions.

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