Monday, May 20, 2013

HSBC downgrades ITC to ‘neutral’ post Q4 results

20 May, 2013,NEW DELHI:--

HSBC has downgraded ITC from \'overweight\' to \'neutral\' rating but has marginally upped price target from Rs 358 earlier to Rs 365, the brokerage arm of the global bank said in a report.

At 10:20 a.m.; ITC was trading 1.1 per cent higher at Rs 338. It hit a low of Rs 335.30 and a high of Rs 342.20 in trade today.

Last week, the FMCG major reported 19.4 per cent rise in its consolidated net profit for the quarter ended March 31, at Rs 1,928 crore. The company had posted a net profit of Rs 1,614 crore in the corresponding period last year, ITC said in a statement.

Given the run-up in the share price HSBC thinks that the stock offers only limited upside from current levels although earnings growth is likely to stay resilient in FY14. The stock has rallied over 18 per cent so far in the year 2013.

Cigarettes-to-hotels conglomerate ITC Ltd\'s quarterly profits grew by a fifth, helped by strong growth in its 11-year-old non-cigarette FMCG business.

For the full year, net sales of the company\'s cigarette business grew 13.3 per cent to 13,969.98 crore. According to an ET report, the segment clocked 2.5 per cent growth in volume, analysts said, adding they expect the business to post muted growth in volume this year.

\"The brokerage expects cigarette volumes to be weak in Q1 partly due to price hikes, but also due to overstocking,\" said the HSBC report.
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