ITC and JSW Steel: Weekly Recommendations

The two stocks recommended by SMC Global Securities’ Research Team this week are ITC and JSW Steel. These two stocks have shown great potential with positive financial estimates for the next two financial years. So, let’s go through the details of the two stock recommendations for the period between March 17, 2025 and March 21, 2025.

ITC Limited

ITC share price is ₹411.85 (as on March 13, 2025) and its target price is set at ₹484 with an upside potential of 18%.

ITC Limited: Investment Rationale

• ITC Limited is a diversified conglomerate with businesses spanning fast-moving consumer goods, hotels, paperboards and packaging, agribusiness, and information technology.
• Recently, it has set up eight state-of-the-art manufacturing units, which include a Foods facility, a Moulded Fibre factory for plant-based sustainable packaging and a unit for personal care products.
• Other recent investments include a global spices processing facility, a world-class packaging plant, an export-focused plant and 2 integrated consumer goods facilities. The company plans to invest ₹20,000 crores across various businesses in the medium term.

• ITCMAARS, an eco-system for production of quality produce, has developed plans to connect over 4,000 Farmer Producer Organisations (FPOs) and impact 10 million farmers in the next five years. The innovative phygital platform currently empowers 1.7 million farmers. The company expects this farmer addition would be the backbone of the company’s agri-value chain for sourcing of produce.
• ITC is scaling up the cultivation of medicinal and aromatic plants to expand its presence in the fast-growing health and wellness products market in food, personal care, and other categories. The initiative will support ITC’s FMCG ambitions and leverage the B2B nutraceuticals space.
• As part of the ITC Next strategy, it is institutionalizing a digital-first culture with digital adoption being implemented across every node of its operations spanning smart sourcing, smart insighting, smart manufacturing, smart distribution, and smart consumers.
• The company plans to acquire a 100% stake in Prasuma, a leading player in the frozen, chilled, and ready-to-cook foods space in India. The first tranche of 43.8% stake shall be acquired upfront, and the balance stake will be acquired, in tranches, by June 2028. It plans to jointly build an unparalleled, full-stack frozen, chilled, and ready-to-cook foods portfolio.
• Its cigarette business continues to make strategic portfolio and market interventions, with a focus on competitive belts and to counter illicit trade, to drive volume-led growth and reinforce market standing.

ITC Limited: Shareholding Pattern

The institutions’ shareholding is highest in ITC at 44.91%.

ITC Limited: Valuation

The company has expanded its food division by acquiring Prasuma. This acquisition would further fortify ITC’s presence in these future-facing categories. The company`s focus on digital transformation, along with business expansion would help drive future growth with efficiency.

Thus, it is expected that the stock may see a price target of ₹484 in 8 to 10 months’ time frame on one average P/Bv of 7.76x and FY26 BVPS of ₹62.40.

ITC Limited: Risk

• High commodity price
• Economic slowdown

JSW Steel Limited

JSW Steel share price is ₹999.55 (as on March 13, 2025) and its target price is set at ₹1,178 with an upside potential of 18%.

JSW Steel Limited: Investment Rationale

• JSW Steel is the flagship business of the diversified, US$ 23 billion JSW Group. The Company’s manufacturing unit in Vijayanagar, Karnataka is the largest single-location steel-producing facility in India.
• On the development front, JSW Steel has aggressively expanded into a global steel giant over the past three decades, with a consolidated crude steel capacity of 35.7 million tonnes per annum (MTPA), including 1.5 MTPA in the US.
• In the future, the company’s domestic capacity of 32.5 MTPA is set to increase to 34.2 MTPA following the full commissioning of an expansion project at JSW Vijayanagar Metallics Ltd (JVML) in Karnataka.
• Looking ahead, JSW Steel also plans to boost its total capacity to 43.5 MTPA within the next three years. The company’s Vijayanagar plant, currently India’s largest single-location steel production facility, has a current capacity of 17.5 MTPA, including the under-commissioning expansion.

• Furthermore, the company’s recent acquisition of Thyssen Electrical Steel India, Nashik, through its joint venture with JFE Steel, has received approval from the Competition Commission of India (CCI) and is expected to close by the end of FY25.
• Consolidated crude steel production for Q3 FY25 reached 7.03 million tonnes, reflecting a 2% increase YoY and a 4% rise QoQ. Steel sales for the period totaled 6.71 million tonnes, up 12% YoY and 10% QoQ.
• Additionally, Indian steel production in February 2025 totaled 23.32 lakh tonnes, marking a 13% growth compared to 20.59 lakh tonnes in February 2024. The capacity utilization at Indian operations stood at 93.5% in February 2025.
• A better product mix resulted in sales of VASP (Value Added Steel Product) at 3.9 million tonnes, which increased by 9% QoQ and 12% YoY. Exports constituted 8% of sales from the Indian operations for Q3 FY25 compared with 7% of sales in Q2 FY25.
• Net debt stood at ₹80,921 crores as of 31st December 2024, lower by ₹1,884 crores as against 30th September 2024, on cash generated from operations and release of working capital. At the end of the quarter, net gearing (Net debt to equity) stood at 1.00x as against 1.01x at the end of Q2 FY25.

JSW Steel Limited: Shareholding Pattern

In the overall shareholding of JSW Steel, promoters have the highest shareholding at 44.85%.

JSW Steel Limited: Valuation

The company has a proven track record, and according to its management, the demand for steel in India remains robust, driving the prices of value-added products. Stable revenue, higher sales volumes, reduced input costs and effective cost control measures are expected to strengthen the company’s financial position.

Additionally, the completion of ongoing capital expenditure projects will boost production capacity. Management also highlights that the U.S. economy continues to perform better than expected, with a positive outlook under the new administration. However, this strong growth in the U.S. may be partially offset by weaker conditions in other regions, particularly Europe.

Thus, it is expected that the stock may see a price target of ₹1,178 in 8 to 10 months’ time frame on a current P/BV of 3.07x and FY26(E) BVPS of ₹383.62.

JSW Steel Limited: Risk

• Sizeable capex and associated risks
• Volatility in raw material prices

Conclusion

These two stocks, one being a diversified company (FMCG, hotels and paperboards) and the other being a steel producer, can reach their target price in the coming 8 to 10 months. However, it is always better if you do your analysis before investing and set a stop-loss target. To keep track of your invested stocks, open demat account with SMC Global Securities and invest on the go.

Reference:
https://www.smctradeonline.com/research/wise-money/241

Author: All Content is verified by SMC Global Securities.