Investors in ITC Limited (NSE:ITC) had a good week, as its shares rose 7.9% to close at ₹280 following the release of its second-quarter results. Results were roughly in line with estimates, with revenues of ₹203b and statutory earnings per share of ₹16.51. This is an important time for investors, as they can track a company’s performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We’ve gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, the current consensus, from the 22 analysts covering ITC, is for revenues of ₹736.3b in 2027. This implies a perceptible 4.7% reduction in ITC’s revenue over the past 12 months. Statutory earnings per share are forecast to reduce 7.4% to ₹13.95 in the same period. In the lead-up to this report, the analysts had been modelling revenues of ₹790.1b and earnings per share (EPS) of ₹14.36 in 2027. The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the small dip in earnings per share expectations.
See our latest analysis for ITC
The analysts made no major changes to their price target of ₹320, suggesting the downgrades are not expected to have a long-term impact on ITC’s valuation. The consensus price target is just an average of individual analyst targets, so – it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values ITC at ₹440 per share, while the most bearish prices it at ₹280. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 9.2% by the end of 2027. This indicates a significant reduction from annual growth of 5.7% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 6.0% annually for the foreseeable future. It’s pretty clear that ITC’s revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that said, the long-term trajectory of the company’s earnings is a lot more important than next year. We have estimates – from multiple ITC analysts – going out to 2029, and you can see them free on our platform here.
Before you take the next step you should know about the 1 warning sign for ITC that we have uncovered.
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