ITC shares hit all-time high after reporting 24% rise in Q2 net profit

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ITC shares surpassed its historical high of Rs 353, which it reached on July 3, 2017
In Q2FY23, net revenue was Rs 17,108 crore, up 24.4% year on year
Cigarette sales increased by 23.3% year on year, driven by a 20% increase in volume

Written By:Yash

Updated: October 20 2022 09:45:13 PM ET

ITC shares hit an all-time high of Rs 354, up 1% in intraday trade on the BSE on Friday after the company reported a 24.4% year-on-year (YoY) increase in its consolidated net profit to Rs 4,620 crore for Q2FY23.

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The stock surpassed its historical high of Rs 353, which it reached on July 3, 2017. So far in the fiscal year 2022 (CY22), ITC has outperformed the market by 62%, compared to a 0.533% increase in the S&P BSE Sensex.

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Profit in the prior year was Rs 3,714 crore. In Q2FY23, net revenue was Rs 17,108 crore, up 24.4% year on year. The performance was credited to solid and broad-based growth across markets and channels, according to the company.

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Strong revenue growth was driven by exceptional growth in the cigarettes, FMCG, and paperboard sectors. Agribusiness and hotels also expanded at a faster rate, despite reduced base-quarter sales. Cigarette sales increased by 23.3% year on year, driven by a 20% increase in volume and a 3% improvement in product mix. Stable taxes and enforcement action against illegal cigarettes are fueling volume increases.

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According to ICICI Securities, “ITC continued its growth momentum across categories in Q2FY23. The cigarettes category has benefited from stable taxation, market share gains with aggressive trade promotions and newly launched premium brands in the last year. FMCG business is witnessing strong growth specifically in underpenetrated foods category & strong traction from education & stationary business (fully functional education institutions have propelled growth after two years).”

“We believe ITC would continue to grow in its core business of Cigarettes and FMCG with stable taxation & softening of raw material prices. We remain positive on ITC from a long-term growth perspective,” the brokerage firm said in a quarterly update. It maintains a BUY rating on ITC with the revised target price on the stock to Rs 405 per share from earlier Rs 360 per share.