Imperial Brands PLC

Imperial Brands PLC (LON: IMB) is an FTSE 100 index listed British multinational tobacco entity.

On 1 February 2023, IMB has scheduled its annual general meeting.

Investment Rationale for Valuation – Watch at GBX 2,044.00

• Profit Decline: In FY22, operating profit and basic earnings per share decreased by 14.7% and 44.7%, respectively.
• Overvalued Multiples: On a forward 12-month basis – key trading multiples (EV/EBITDA, Price/Earnings, Price/Cash Flow, and Price/Book) are higher than the median of the Consumer Non-Cyclicals sector.
• Macroeconomic Risks: The market sentiments can remain weak in the short-term due to 40-year high inflation, expected economic recession, subdued consumer disposable income, geopolitical tensions, and political risks.
• Technical Standpoint: The stock price is trading below the 20-day SMA (GBX 2,086.63), reflecting a bearish price momentum.

Share Price Chart

(Source: REFINITIV, Analysis by Kalkine Group)

Conclusion

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Based on the profit decline, overvalued multiples, macroeconomic uncertainties, bearish technical stance, and overvalued multiples, a “WATCH” recommendation has been given on Imperial Brands PLC at the closing market price of GBX 2,044.00 (as of 13 January 2023).

Investors can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance level is 13 January 2023. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: ‘Kalkine reports are prepared based on the stock prices captured either from the London Stock Exchange (LSE) and or REFINITIV. Typically, both sources (LSE and or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.’

Note 5: Dividend Yield may vary as per the stock price movement.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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