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Shares of ITC Ltd rose as much as 3.5 percent on Thursday after the fast-moving consumer goods company reported an impressive revenue growth in the cigarette business. ITC's cigarette revenue growth stood at 10.2 percent as against CNBC-TV18 poll estimate of 9-11 percent.

ITC saw a robust broad-based recovery in the cigarettes business despite disruptions due to the third wave, with volumes surpassing pre-pandemic levels.

The company said it has witnessed strong growth across all operating segments despite the impact of the third wave of the pandemic.

At 9:27 am, shares of ITC were trading at Rs 269.45, up 1.1 percent, on the BSE. ITC stock hit a three-year high at Rs 279 on the NSE today.

ITC shares touched an intraday high at Rs 273.40 on the NSE. (Source: NSE)

ITC's stock has been gaining for the last three days and has risen 8.92 percent in the period.

Here's a snapshot of the cigarette maker's overall earnings performance for the quarter ended March:

ITC's Year-on-Year earnings performance in the fourth quarter of FY22

Meanwhile, the FMCG company beat CNBC-TV18 poll estimates on almost all fronts. Take a look here:

ITC's Q4 FY22 earnings in comparison with CNBC-TV18 Poll estimates

The hotels business also saw a smart recovery with sequential improvement in Average Room Rates, although still below pre-pandemic levels. But domestic leisure and wedding segments drove recovery while business travel saw a progressive improvement and recovery in international travel was at a nascent stage, ITC said.

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Besides, the Paperboards, Paper and Packaging segment recorded strong growth aided by demand revival across most end-user segments, higher realisations, product mix enrichment and exports. Paperboard volumes were at a record high and sustainable products portfolio continues to be scaled up, the company added.

CLSA believes that the company will continue to progress on the path of recovery which will aid ITC's profitability. The brokerage house says 'buy' ITC shares with a target price of Rs 310.

“At a time when most peers witness margin headwinds, every single segment of ITC has seen stable to expanding margins in 4Q, with smart gains in cigarette & FMCG,” said Jefferies in a note to clients.

Cigarette volume growth at 9 percent is impressive with double-digit EBIT growth, which is broadly in-line, Jefferies added while maintaining its ‘buy’ recommendation on the stock. “ITC stands out given high margin visibility & we retain Buy,” the foreign brokerage house added.

JP Morgan has upgraded its rating on the stock to ‘overweight’ while raising its target price to Rs 305, and Morgan Stanley also has an ‘overweight’ stance on the FMCG company’s shares with a hike in target price to Rs 293 from Rs 276.

Additionally, the company's dividend has increased since FY19. Take a look here:

Jefferies pointed out that an improvement in dividend pay-out drives up ITC's return on equity to a 7-year high of 25 percent.

(With inputs from the Research Desk)

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First Published:May 19, 2022 9:56 AM IST