ITC Ltd. share price target

ITC reported a steady quarter with broad-based growth across segments. Change in Estimates | Target | Reco Cigarette volumes grew a healthy 7.5% with 8.8% EBIT growth as stable prices propelled steady increase in consumer demand. FMCG business...

ITC Ltd Q2FY19 results Comment Revenue increased by 3.19% to Rs. 10891.23 Cr in Q2FY19 when compared to the previous quarter. Also, it rose by 6.5% when compared with Q2FY18.

ITC has reported largely an in-line performance in Q2FY19 with an estimated cigarettes volume of ~7% YoY. Despite a robust YoY growth in cigarettes volume, cigarettes revenue declined by 2% QoQ. Further, EBIT growth at 9% YoY is slightly disappointing. Total EBIDTA growth stood at healthy 12% YoY helped by 77% growth in FMCG others segment. PAT grew by 12% YoY, in line with our estimate. At CMP, the stock trades at 25x FY20E earnings, which is reasonable considering the...

ITC's cigarette segment posted robust volume growth of ~6% in Q2FY19. Cigarette volumes had grown 1.5% in Q1FY19 after three consecutive quarters of volume de-growth. In addition to strong growth from the cigarette segment, sales growth of 7.3% YoY was supported by FMCG, agri business, paperboard & hotels business growth of 12.7%, 12.8%, 8.8% & 20.8%, respectively Operating profit grew 11.8% to | 4,206 crore supported by 8.7% & 13.4% EBIT growth in cigarette & paperboard segments. FMCG EBIT...

Reiterate BUY. No change in estimates and TP of Rs 382, valued at 32x (~20% discount to sector) Sep-20E EPS. ITCs revenues grew by 14.7% to Rs 110.9bn (vs. est. of Rs 106.8bn) driven by cigarette revenue growth of 10.4% (exp. 8%) with volume growth of ~5.5% (exp. 4.5%). Cig. EBIT growth of 9.5% trailed value growth owing to a one-off (1% growth impacted) on account of damage of stock during Kerala floods (insurance claim will be reimbursed in 3Q). Non-cig. business grew by 12% (in-line). EBITDA/APAT grew by 12/13% vs. exp. of 12/12%.

Cigarette EBIT was marginally impacted by stock damage due to floods in Kerala and some costs relating to the shift to new graphic health warnings on the packs from 1 Sep18. Cigarette EBIT, thus, grew at a relatively slow rate of 8.7% YoY (v/s sales growth), with the margin contracting 110bp YoY to 71.2%. INR585m v/s INR205m in the year-ago period. Revenues of Agri Business/Paperboards, Paper & Packaging/Hotels grew by 12.8%/8.8%/20.8%. EBITDA margin expanded 160bp YoY to 38.

ITC's Q2FY19 results came marginally ahead of our expectations. The cigarette business posted ~6% volume growth which was marginally better than estimate of 5%. The company reported strong 12.7% jump in FMCG business. Further, a 12.8% revenue growth in Agri businesses was encouraging as the business reported growth in the second consecutive quarter after lackluster performance in prior four quarters. Volume growth in cigarette business is continuously improving, which is a key positive. Going ahead, we believe that the volume growth would continue to...

The GST Council is scheduled to meet coming Friday, Sep 28 to, inter alia, decide on a way to raise funds to help re-build Kerala after the state faced massive losses from severe flooding last month (Aug'18). The natural consequence of this is, expectedly, renewed pressure on ITC's share price. Interestingly, the GST Council may not need any parliamentary approval for this additional levy since Article 279A of the Constitution has already been amended to allow the GST Council to recommend any special rate or rates for a specified period, to raise additional resources during any natural calamity or disaster'. We expect the stock to recover once the event is out of the way this week, as we do not expect the fresh levy to be all that...