ITC Share Price: Should You Buy, Sell, or Hold After Q3 Results?
ITC Ltd, the FMCG giant, has announced its Q3 results for FY25, revealing a mixed performance amid economic headwinds and rising input costs. With a decline in net profit but steady revenue growth, investors are now contemplating whether to buy, sell, or hold its shares. Let’s analyze the results, expert opinions, and key financial metrics to help you make an informed decision.
Its Q3 Results Overview
The company reported a 7.27% drop in consolidated net profit to ₹5,013.16 crore in Q3 FY25, compared to ₹5,406.52 crore in the same quarter last year. This decline was primarily due to increased input costs and subdued demand in some segments.
On the revenue front, it’s operations grew 9.05% to ₹20,349.96 crore, up from ₹18,660.37 crore in the previous year. The company also declared an interim dividend of ₹6.50 per share, with the record date set for February 12, 2025.
Despite challenging market conditions, ITC delivered a resilient performance, supported by strategic acquisitions and a strong presence across diverse business segments.
Company’s Business Segments Performance
1. FMCG (Including Cigarettes)
- Revenue: ₹14,372.53 crore (+6.35% YoY)
- Cigarette revenue: ₹8,944.83 crore (+7.83% YoY)
- Other FMCG revenue: Up 4%
The cigarette segment remains ITC’s backbone, delivering steady growth. Meanwhile, the non-cigarette FMCG business also expanded, albeit at a slower pace.
2. Agri Business
- Revenue declined slightly due to lower exports, but the company continues to focus on value-added products.
3. Paper & Packaging
- The segment saw muted growth, affected by rising input costs.
4. Hotels Business
- Company recently demerged its hotels division into a separate entity, ITC Hotels Ltd.
- Q3 revenue from the hotel business surged 14.6% to ₹922 crore, marking its best-ever quarterly performance.
5. IT Services & Others
- Revenue from IT services and other businesses rose 14.25% YoY to ₹1,121.33 crore.
Company’s Strategic Moves: Expansion in Frozen Foods
It is aggressively expanding its footprint in the frozen and ready-to-cook foods segment. It has signed definitive agreements to acquire Prasuma and Meatigo, two leading brands in the frozen food industry. This acquisition aligns with ITC’s strategy to diversify its FMCG portfolio beyond cigarettes and packaged foods.
Expert Opinion: ITC Stock Price Outlook
Fundamental Analysis
Nitin Gupta, Senior Research Analyst at Emkay Global, highlights that inflationary pressures have affected its earnings, but revenue growth remains strong. Emkay values ITC at a target price of ₹490 per share based on the sum-of-the-parts (SOTP) valuation, factoring in a 6% cut due to macroeconomic challenges.
Technical Analysis
Ganesh Dongre from Anand Rathi suggests that it has strong support at ₹420 and remains bullish in the near term. If the company crosses ₹465 on a closing basis, it could potentially hit ₹485 per share.
- Support Level: ₹420
- Resistance Level: ₹465
- Near-term Target: ₹485
Should You Buy, Sell, or Hold ITC Stock?
Reasons to Buy
- Strong Brand & Market Leadership – Company dominates the cigarette market and has a growing presence in FMCG, hotels, and agri-business.
- Expansion in Frozen Foods – The acquisitions of Prasuma and Meatigo strengthen its foothold in high-growth categories.
- Attractive Dividend Yield – With a dividend yield of 3.12%, ITC remains a favorite among income-seeking investors.
- Strong ROCE & ROE – ITC boasts a Return on Capital Employed (ROCE) of 37.5% and a Return on Equity (ROE) of 28.4%, indicating strong profitability.
Reasons to Hold
- Resilient Performance – Despite inflationary headwinds, ITC’s revenue continues to grow steadily.
- Technical Support at ₹420 – Long-term investors can hold with a stop-loss at ₹420 and aim for higher targets.
Reasons to Sell
- Input Cost Pressures – Rising costs of raw materials (edible oil, wheat, packaging) may affect margins.
- Slow FMCG Growth – While non-cigarette FMCG is growing, it hasn’t reached the scale needed to offset cigarette dependency.
Key Financial Ratios & Valuation
| Metric | ITC Value | Industry Avg. |
|---|---|---|
| Market Cap | ₹5,51,892 Cr. | – |
| Current Price | ₹441 | – |
| 52-Week High/Low | ₹495 / ₹374 | – |
| P/E Ratio | 27.8 | 26.6 |
| Book Value | ₹60.2 | – |
| Dividend Yield | 3.12% | – |
| ROCE | 37.5% | – |
| ROE | 28.4% | – |
| Debt | ₹304 Cr. | – |
| Graham Number | ₹148 | – |
| Intrinsic Value | ₹182 | – |
| PEG Ratio | 2.76 | – |
Final Verdict: Is ITC a Good Investment?
ITC remains a solid long-term investment due to its diverse revenue streams, strong brand, and consistent dividend payouts. However, near-term challenges like rising input costs and slow FMCG growth could weigh on the stock.
- Long-term investors should hold with a target of ₹490.
- Short-term traders can buy on dips near ₹420 and aim for ₹465-₹485.
- Risk-averse investors may wait for margin improvements before taking fresh positions.
Conclusion: ITC stock is a hold with a bullish bias, provided it stays above ₹420. With steady growth, strategic acquisitions, and strong financials, ITC continues to be a promising investment in the FMCG sector.
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.