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Most analysts remained optimistic on ITC Ltd. as its mainstay cigarettes business recovered and segments such as paperboard and hotels grew.

India’s largest cigarette maker saw its third-quarter as mobility picked up and on efficient distribution system. Its cigarette sales grew 13.6% over the year earlier.

Analysts expect no tax increase on cigarettes in the Union Budget 2022 to give confidence on sustaining its volume growth.

While ITC’s revenue from hotels doubled, that from the paperboards, paper and packaging rose 39%. The hotels business sustained the recovery with revenue at 86% of the pre-Covid levels. It reported EBIT at Rs 51 crore after six consecutive quarters of operating losses.

But high commodity inflation hurting the company’s margin.

Shares of ITC rose as much as 1.73% intraday but pared all the opening gains to trade 0.15% down as of 10:50 a.m. Of the 36 analysts tracking the company, 27 maintain a ‘buy’, eight suggest a ‘hold’ and one recommends a ‘sell’, according to Bloomberg data. The 12-month consensus price target implies an upside of 17.7%.

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