ITC shares will rally to ₹585 or drop to ₹435? Analysts await upcoming budget for more cues

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Brokerages Rating Target Price (Next 12 months) CLSA Outperform ₹470 Morgan Stanley Overweight ₹506 Jefferies Hold ₹435 Citi Buy ₹515 Goldman Sachs Buy ₹480 Investec Buy ₹504 Emkay Global Buy ₹510 Nuvama Buy ₹505

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The March quarter results of ITC Ltd ., the cigarettes-to-hotels conglomerate, were a mixed bag but analysts at multiple brokerage firms said its stock remains a 'buy', thanks to stable cigarette business. A couple of brokerages have price targets for ITC in the range of435-585. ITC's shares have corrected 12% from its peak of ₹499, hit in July last year.With a 'Buy' rating on ITC, Citi has increased its target price on the stock to515 per share.The foreign brokerage said that it will monitor any change in taxation or other adverse regulatory pronouncements in the Union Budget post elections — which could impact volumes and/or the ability to mitigate cost pressures.Jefferies, meanwhile, has a 'hold' call on the ITC stock, saying the cigarette business surprised positively, especially on volumes, and drove beat on segmental EBIT. It has a price target of435 per share on the counter.According to the brokerage firm, acute pressures in agri and paperboards caused an earning miss in the fourth quarter of the financial year 2024.Jefferies continues to see the upcoming Budget as the most important event for ITC's share price performance.CLSA, which has an 'outperform' rating on ITC and a target of470 per share, said the March quarter was steady for Cigarettes but paper and agri remained subdued. The profitability in other FMCG segments was impacted by a one-time gain in the base quarter.CLSA said the segment is maintaining an upward margin trajectory on a full-year basis. The brokerage has slashed its near-term earnings by 2-3%, factoring in miss in other segments.Domestic brokerage house Emkay Global stays positive on ITC on the back of better execution and macros supporting its diversified businesses, adjusted for near-term cyclical pressures.However, Emkay highlighted that the FY25 delivery is likely to be marred by inflationary stress in cigarettes, muted agri business outlook, and paper business down cycle.Better monsoons would improve prospects for ITC's agri business and its cigarette margin outlook for FY26 estimates, the brokerage said."ITC saw a mixed performance in Q4, with cig estimated volume up 2% (in-line). But driven by weakness in agri-business revenue and profitability in paper, non-cig business put up a muted show, with 2% sales dip and 15% EBIT drop in Q4FY24," Emkay said while trimming its target price to510 per share, factoring in the stress in cigarette margin.Motilal Oswal in a report said the resilient nature of ITC's core business, amid an uncertain industry environment, and its 3-4% dividend yield make the company a good defensive bet in the ongoing volatile interest rate environment.The brokerage has reiterated a 'Buy' rating with a target price of515 per share.Of the 38 analysts that have coverage on ITC, 35 have a 'buy' rating on the stock, while two analysts have a 'hold' rating and one says 'sell'.ITC shares were trading flat on Friday and are down 6% so far this year.