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ITC shares light up as better growth visibility makes Motilal Oswal upgrade rating after 5 years

ITC shares light up as better growth visibility makes Motilal Oswal upgrade rating after 5 years

ITC shares light up as better growth visibility makes Motilal Oswal upgrade rating after 5 years
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By CNBCTV18.com Jun 16, 2022 2:38:29 PM IST (Updated)

ITC share price: Shares of ITC Ltd rose as much as two percent on the BSE after Motilal Oswal Financial Services upgraded its rating on shares of the FMCG player to ‘buy’ from ‘neutral’ with a target price of Rs 335 which implies percent upside from the current level. However, after a while shares of ITC fluctuated between losses and gains and was trading in the green now.

ITC Ltd shares rose as much as 2 percent on the BSE after Motilal Oswal Financial Services upgraded its rating on the fast-moving consumer goods (FMCG) player after almost five years.

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The brokerage now has a ‘buy’ rating, with a target price of Rs 335, implying a 27 percent upside from the current level.
The domestic brokerage firm said that the improvement in growth visibility was the key driver for the upgrade. This comes amid some FMCG firms saying inflation has severely impacted sales.
Motilal Oswal upgraded ITC's rating almost five years after downgrading it to 'neutral'. Most other brokerages are also upbeat on ITC. ICICI Direct, Prabhudas Lilladher, and Sharekhan have kept their targets for ITC in the range of Rs 305-320 per share.
After an initial boost, ITC shares fluctuated between losses and gains. At 12:29 IST, the scrip was up 0.1 percent at Rs 263.75 on the BSE.
The stock of cigarette-to-FMCG conglomerate ITC has been on a roll, rewarding investors with a return of more than 26 percent so far in 2022. In the last year, the stock has returned more than 27 percent.
Here's how the stock has performed in 2022 so far and in the past one year:
Cigarette demand continues to be very robust, while lower capital expenditure requirements should result in better cash flow and higher payouts, Motilal Oswal said.
"A high dividend yield of 4-5 percent makes ITC a good defensive bet in a volatile environment," the brokerage firm added.
The domestic brokerage firm sees the earnings of the cigarette maker growing 15 percent compounded annually over FY22-24. Besides, it noted that the company management reiterated its payout policy of 80-85 percent of profit. The brokerage expects lower capex requirements to result in better cash flow and higher payouts.
Rahul Mohindar of viratechindia.com says 'sell' ITC shares with a target price of Rs 258 and a stop loss of Rs 268-269.
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