ITC Ltd. share price target

Cig volumes surprise on the upside; Worst seems behind ITC's operating performance for 4QFY16 was better than expected, with net sales up 9.4% YoY to INR101.7b (vs. our est. of INR99.2b) and EBITDA margin...

As highlighted in our earlier communication dated 7th March, ITC has implemented ~13% price hikes in King Size Filter segment. ITC's focus on Cig volume growth is quite evident as there is no price hike in...

The government proposed an increase of 10% in the excise duty on cigarettes of all lengths in the FY17 Union budget. The street had been holding expectations of 12-15% for a while because of which ITC's stock had corrected by about 10% before the budget. The hike is...

We believe that ITC would need to take ~5-6% increase in cigarette prices to pass on the duty hike to the consumers, without sacrificing the margin profile of the business. The previous price increase was taken a year back and hence we believe that ITC would not face any hassles to pass on the hike. We had already modelled in a 10% increase in excise duties and 2% volume growth for the cigarette business in FY17E...

ICICI Securities Ltd | Retail Equity Research The government hiked excise on tobacco products other than bidis by 1015%. However, the magnitude of excise increase for cigarettes in particular is not as steep as compared to prior excise hikes. Union Budget...

ITC has seen a significant YTD correction of 12% on weak quarterly results and with poor expectations from the fast-nearing Union Budget 2016, where significant hike in cigarette excise duties is expected. Our trade channel checks indicate a hike (range) of 8-15%, but...

ITC posted a poor set of numbers for 3QFY2016, both on the top-line and bottom-line fronts. The top-line was subdued due to lower growth in Cigarettes & Hotel businesses and de-growth in Agri business, which in turn resulted in a lower profitability of the company. Key highlights: ITCs net sales for the quarter grew by 2.6% yoy to Rs9,177cr. The Cigarettes business posted a 5.7% yoy growth in net sales to Rs4,380cr, aided by price hikes. A muted sales growth in the Cigarettes business resulted in the segment posting a 3.4% yoy growth in its EBIT. The FMCG (others) business, which posted a 7.1% yoy growth in net sales to Rs2,478cr, posted an EBIT level profit of Rs19cr. Further, the Paperboards and Packaging division posted a growth of 5.1% yoy and 12.7% yoy in revenue and segmental EBIT, respectively. The Hotels business posted a 4.5% yoy growth in its top-line, while it reported a de-growth at the EBIT level. The Agri business posted a de-growth of 7.3% yoy in revenue, while its EBIT de-grew by 3.1% on a yoy basis. Overall, the companys OPM expanded by 55bp yoy to 39.3%, owing to lower raw material costs (down 254bp yoy as...

ITCs 3QFY16 results were broadly in line with our expectations. Revenues jumped 2.6% YoY to Rs 91.8bn (vs. our estimate of Rs 92.6bn). The cigarette business posted 5.7% revenue growth and 160bps contraction in EBIT margin. The volume decline of ~9% 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...