ITC Shares Rise After Q1 Results: Why Nomura Upgraded the Stock to 'Buy'

ITC Limited has returned to the spotlight after reporting a solid set of Q1 FY27 earnings, prompting global brokerage Nomura to upgrade the stock to 'Buy'. Following the results, ITC shares gained around 3%, reflecting renewed investor confidence in the company's earnings outlook and long-term growth potential.

The upgrade highlights ITC's improving business fundamentals, attractive valuation, and diversified business model, making it one of the most closely watched large-cap stocks in the Indian market.

ITC Q1 Results: Strong Start to FY27

ITC delivered a healthy quarterly performance supported by stable growth across its diversified businesses. While the cigarette segment continued to generate strong cash flows, the FMCG, Hotels, Paperboards, and Agri businesses also contributed to overall earnings resilience.

The company's consistent execution and disciplined capital allocation have strengthened investor sentiment despite a challenging macroeconomic environment.

Why Nomura Upgraded ITC to 'Buy'

Nomura believes ITC offers an attractive investment opportunity for long-term investors based on several key factors:

Attractive Valuation

Despite its diversified operations and stable earnings profile, ITC continues to trade at reasonable valuation levels compared to several large-cap peers.

Improving Earnings Visibility

The brokerage expects earnings growth to remain healthy as consumer demand gradually improves and non-cigarette businesses continue expanding profitability.

Diversified Business Model

Unlike many FMCG companies, ITC generates revenue from multiple segments including:

• Cigarettes

• FMCG Products

• Hotels

• Paper & Packaging

• Agri Business

This diversification provides stability across different market cycles.

Strong Cash Generation

ITC continues to generate robust operating cash flows, supporting healthy dividends and future investments.

Key Highlights

• ITC shares gained nearly 3% after Q1 results.

• Nomura upgraded the stock to 'Buy'.

• Valuation remains attractive despite recent gains.

• Diversified businesses continue supporting long-term growth.

• Healthy cash generation strengthens investor confidence.

What Does This Mean for Investors?

Nomura's upgrade signals growing confidence in ITC's ability to deliver sustainable earnings growth over the coming years.

Investors may view the company as a combination of:

• Stable dividend income

• Defensive business model

• Consistent cash generation

• Long-term capital appreciation potential

With improving earnings visibility and attractive valuation, ITC continues to remain an important stock for long-term portfolios.

Risks to Watch

While the outlook remains positive, investors should continue monitoring:

• Regulatory changes affecting the cigarette business

• Raw material inflation

• FMCG competition

• Consumer demand trends

• Hotel industry performance

Final Thoughts

ITC's Q1 FY27 performance reinforces the company's position as one of India's strongest diversified businesses. Nomura's upgrade to 'Buy' reflects confidence in the company's improving earnings trajectory, attractive valuation, and resilient business model.

For long-term investors seeking stability alongside growth, ITC remains a stock worth tracking as it continues to strengthen its presence across multiple business segments.