ITC Shares Rise 2% After Q2 Results: What Are Jefferies, Nuvama and Other Brokerages Saying?
ITC shares moved higher by about 2% after the company reported its second-quarter results. The gain may look surprising at first. ITC’s net profit fell 18.5% year-on-year in the quarter. Higher taxes and weaker cigarette earnings pulled profitability down. Yet the stock still rose, and several major brokerages stayed positive on it.
The reason is simple. Investors and analysts looked past the headline profit number and focused on the parts of the business that are growing. The fast-moving consumer goods (FMCG) segment delivered strong growth. That gave the market confidence that ITC is building a wider consumer business beyond cigarettes.
Why Did Profit Fall in Q2?
ITC is one of India’s largest companies. It has interests in cigarettes, packaged foods, hotels, paperboards and agri-business. The cigarette business has long been its biggest profit engine. When that engine slows, the whole company feels it.
In the September quarter, two things hurt ITC. First, higher taxes raised costs. Second, cigarette earnings declined. Together, these factors dragged net profit down by 18.5% compared with the same quarter last year.
It is important to understand that a profit decline does not always mean the business is weak. Sometimes it reflects one-time costs, tax changes or a temporary dip in a single segment. Analysts appear to see this quarter’s drop in that light.
The Bright Spot: Strong FMCG Growth
The FMCG business was the standout performer. This segment includes popular brands in foods, biscuits, snacks, personal care and stationery. Strong growth here matters for two reasons.
First, it shows that ITC’s efforts to reduce its dependence on cigarettes are working. Second, FMCG businesses tend to grow steadily and can command strong valuations over time. If this segment keeps expanding, it could slowly change how the market values ITC as a whole.
For long-term investors, this is the key takeaway from the quarter. The cigarette business may face tax pressure, but the consumer brands business is gaining scale.
What Are the Brokerages Saying?
Four well-known brokerages shared their views after the results. All of them remain positive on ITC shares.
Jefferies
Jefferies stayed bullish on the stock. The brokerage’s target price sits at the higher end of the range, at Rs 355. A target price is the level a brokerage expects the stock to reach over the next year or so. It is not a guarantee, but it shows where analysts see value.
Nuvama
Nuvama also maintained a positive view. Its target price is around Rs 340. The firm appears to focus on the strength of the FMCG business and the company’s overall stability.
Emkay
Emkay kept a positive stance as well, with a target price in the Rs 300 to Rs 355 range. Like the others, it seems to look beyond the profit decline and toward the company’s longer-term prospects.
DAM Capital
DAM Capital rounded out the group of positive brokerages. Its target price also falls within the Rs 300 to Rs 355 band. The common thread across all four is confidence in ITC’s diversified business model.
What Should Investors Take Away?
The market’s reaction tells a clear story. A single weak quarter does not define a large, diversified company. ITC’s shares rose because the FMCG growth offset concerns about cigarettes and taxes.
Still, investors should stay balanced. The cigarette business remains central to ITC’s profits. Any further tax increases could keep pressure on earnings. The FMCG segment must keep growing to fill that gap.
Brokerage target prices are useful signals, but they are opinions, not promises. Investors should look at their own goals, time horizon and risk tolerance before acting. For now, the message from Jefferies, Nuvama, Emkay and DAM Capital is consistent: they see value in ITC despite a soft quarter.
