Tremendous opportunity to earn in the shares of this FMCG company, know how much this well-known brokerage firm has targeted

ITC shares expected to rise sharply

There is a possibility of a sharp rise in the shares of ITC. According to global brokerage and research firm CLSA, the growth in ITC Limited’s FMCG business could lead to an increase of 26 per cent in its shares. According to CLSA estimates, ITC’s FMCG business will grow at a CAGR of 31 per cent during 2020-2024. The growth of the industry, margin lever and good asset utilization position will give impetus to the shares of the company.

Strong potential for growth in ITC shares

ITC shares have been under pressure so far this year. This stock has registered a decline of 1.6 percent so far and it is trading at Rs 211. It is performing well below the benchmark indices. CLSA is of the view that the valuation of ITC’s share has not yet reaped the full benefits of the positive environment of FMCG business. Its stock is currently trading at 2.5X EV/Sales. Apart from this, the company can do buyback and can also give dividend.

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Many strong brands of the company will help in earning

CLSA has given it a BUY rating with a target price of Rs 265. That is, an increase of 26 percent can be recorded in its current price of 211. With dividend, it can register an increase of 32 percent. Analysts at CLSA believe that the company’s mature brands such as Aashirvad, Sunfeast, Yippe, Bingo and Classmate can help it emerge as a new brand. However, analysts are worried about lower gross margins in its flour (Aashirvaad) business. Still, the gross margins of Sunfeast, Bingo and Yippee are increasing and can fetch good margins. ITC may make some more acquisitions in the coming days.

(Article: Kshitij Bhargava)

(The stock recommendations given in the story are those of the respective research analysts and brokerage firms. Financial Express Online takes no responsibility for the same. Investments in capital markets are subject to risks. Please consult your advisor before investing.)

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Nisha Chawla
She is an expert in Banking, Finance and working with an international bank. She sharing her ideas and knowledge with Business Khabar.
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