ITC Ltd. share price target

ITCs 2QFY16 results were below our expectations because of lower-than-estimated growth in the cigarette business. Despite the expansion in EBIT margin, the volume decline of ~15% hampered overall performance.

Background: ITC, with revenues in excess of $7bn, is a market leader in Cigarettes with about 70+% volume share and 85+% value share. Cigarette business is a cash cow accounting for 50% for Sales and ~ 81% of EBIT. To diversify away from cigarettes with a long term perspective, they have other businesses such as FMCG, Hotels, Paperboards, Packaging, Agri-Exports, Branded Apparel & Stationery. ITC also a rural initiative with 6500 `e-choupal's aimed at farmers for...

Taxation and regulatory headwinds muted cigarettes growth as per management; sequentially cigarettes business is seeing some improvement in demand but it will take time for recovery; We expect volumes to be in negative zone for next quarter too...

ITC reported revenue of Rs88bn for the quarter ended Sep'15, a growth of 3.5%, which was 4% below our estimate. EBITDA and net profit came in at Rs34.6bn (estimate of Rs35.8bn) and Rs24.3bn (estimate of Rs25.5bn), respectively. We expect the volume growth in cigarettes to recover in 2HFY16E after a fall of ~14% in the first half of the fiscal. We estimate ITC's revenue and earnings to grow at a CAGR of 10% and 7%, respectively through FY15-17E. We retain our BUY...

Background: ITC, with revenues in excess of $7bn, is a market leader in Cigarettes with about 70+% volume share and 85+% value share. Cigarette business is a cash cow accounting for 50% for Sales and ~ 81% of EBIT. To diversify away from cigarettes with a long term perspective, they have other businesses such as FMCG, Hotels, Paperboards, Packaging, Agri-Exports, Branded Apparel & Stationery. ITC also a rural initiative with 6500 `e-choupal's aimed at farmers for...

business segments reported uninspiring growth and earnings trajectory continued its downward trend. While it is difficult to gauge the bottom for cigarette volumes, considering current prohibitive pricing and demand environment, we do not see a...

The World Health Organisation (WHO) released its 2015 Global Tobacco Epidemic report, whichhighlightstheprogressmadebyvariousgeographiesandcountriesincurbingtobacco consumption.Accordingtothereport,measurestakenbytheIndiangovernmentarelagging...

Post the ban on sale of loose cigarettes in Maharashtra, ITC?s stock price has corrected ~10% in the last 7 days. There is a concern among investors that pan-India ban on sale of loose cigarettes is imminent.

Buy at Rs 320.9 and add on dips to Rs. 287-301; Price Target: Rs. 344 in 1 quarter